Winans Investments: Corporate Blue Bloods - Legacy Stocks Prosper Through 44 years of Bull & Bear Markets!

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Winans Investments

Mar 12, 2014, 07:53 ET

NOVATO, Calif., March 12, 2014 /PRNewswire/ -- Every bull market produces a lot of investment hype around buying the "hot stocks" that eventually led investors off a financial cliff during the next bear market.

During the 1970's, it was the "Nifty Fifty".

During the 1990's, it was the "New Economy" technology stocks.

During the 2000's, it was global investing in the "BRIC" countries.

Today, it's about exotic exchange traded funds and social networking stocks.

While all these investment themes sound wonderful, the basic problem is that Wall Street's idea of conducting "long-term" research to validate these theories usually covered the previous 5 to 10 years.

While multi-decade investment research can be a valuable investment tool, analyzing history isn't as easy as it seems for two big reasons:

1.

It's difficult to retrieve investment data beyond 1980 using popular financial data services (not to mention that much of the older data is incorrect and needs to be audited).

2.

There are many statistical flaws inherent in conventional stock market indices due to their frequent changes in the underlying stocks and data weighting methods.

Respected market researcher Ken Winans tackled the problem by developing an unweighted composite of 110 senior common stocks from diverse industry sectors. Most of the companies have been in operation since 1897 (on average), and most have been continuously traded on the New York Stock Exchange (NYSE) since 1970.

This index is called Winans Legacy Stock Index (symbol: WILSI).

Since the WILSI's underlying components remain unchanged over a 44-year timeframe, this provides a baseline to compare today's financial conditions to past stock market cycles using the exact same securities.

This index also paints a very different picture than what many investors believe about boring, "old economy" stocks.

Average Annual Returns 1970-2013

WILSI

S&P 500 Index

Since 1970

11.8%

11.7%

Since 1974

12.0%

12.3%

Since 1979

12.4%

12.9%

Since 1984

11.1%

12.2%

Since 1989

11.0%

11.6%

Since 1994

10.2%

10.8%

Since 1999

7.4%

6.4%

Since 2004

9.7%

8.9%

Since 2009

16.9%

17.7%




Major Bear Markets


1973-74

WILSI (27.4%) vs. S&P (37.3%)

2000-02

WILSI (13.1%) vs. S&P (42.9%)

2008-09

WILSI (36.4%) vs. S&P (35.4%)

As the table shows, common stocks of older companies (i.e., corporate blue bloods) have performed well over multiple time periods and significantly outperform the overall stock market during most bear markets.

"Successful investing is a marathon, not a sprint. Most investors should consider investing in time-tested corporate blue bloods rather than a "hot stock" that will require an exit strategy when the bull market ends." says Ken Winans of Winans Investments and author of "Investment Atlas."

FYI: For those investors still worried about missing out on future global economic expansion, the corporate blue bloods gained 51% of their revenues from foreign sales in 2013!

More information on the Winans Investments Capital Management & Research can be found at http://www.winansintl.com

SOURCE Winans Investments