THE "BASICS" STRATEGY HOLDS UP DURING THE PANICDespite the August market crash and the euro crisis, it's business as usual for one of our "sell the basics" leaders.
Regular readers know that when it comes to investing in high-growth emerging markets like Brazil, India, and China, we tend to avoid hot gadgets and Internet stocks.
We recommend "the basics" approach of owning dominant global companies that sell things like soda, beer, and cigarettes to these markets.
"Boring" products like these enjoy steady, unrelenting demand… There's scant risk new technology will make having a beer after work obsolete. Plus, well-run companies in these industries generate huge cash flows and big dividends.
One of our favorite "basics" leaders is Philip Morris International (PM). A longtime recommendation of our colleague Dan Ferris, PM is the international offshoot of U.S. cigarette powerhouse Altria, which makes it the largest international vendor of cigarettes in the world… and a direct play on the world's growing middle class, much of which is in Asia.
Dan's readers are earning a
dividend yield of approximately 6% on their original purchase price.
As you can see from today's chart, Philip Morris sold off a bit during the market crash. Shares fell from $70 to $65. But this 7% drop is small compared to the 15%-35% declines many stocks suffered.
Selling the basics isn't exciting… but it's working… even during the panic.
www.dailywealth.com
It's all about "how much you made when you were right" & "how little you lost when you were wrong"