Monday, November 17, 2008

Investment advice (or what's so great about growth stocks)?

I was struck by Jim Hamilton's stock picks in his advice for a wild market. Mainly, I was curious about the relative importance he seems to have placed in the dividend rate. I've always wondered whether growth stocks really beat stocks/firms that are "slow and steady" in the long run or over the trough to trough of a business cycle. I haven't really looked into this but I probably should shelve this to be looked into as future research. My research question is the following: What if we're in for a "lost decade" as in Japan or Latin America. Is the performance of a "growth stock" during this time better than that of a stock that promises certain dividends but relatively slow growth? Now project 5,10,15,20 years after the "lost decade" - which portfolio performs better: growth stocks or the "slow and steady"?

On a more personal note I had to disagree with his pick of Home Depot (They should survive, and when growth resumes, they have a very successful strategy.) I'm in the middle of trying to reinsulate our attic and of course I head to Home Depot to get some insulation. We have 15 inch floor joists in the attic and all Home Depot had were 24 inch wide batts. I had to go to Lowe's to find 16 inch wide batts. I realize that being pissed at a company does not an investment strategy make but I wonder how I can be neutral in this case since Lowe's a little more out of the way than Home Depot. Uggh!

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