Buy and Hold: The Intelligent Investor

In finance, for personal investors, they advise us to diversify our investments across stocks (by investing in index funds) and across time, by buying young and holding till retirement. This diversification across time is different from the typical, say, average small company fund that flips its stocks, on average, every five months. One prominent and successful investor, though, took a perspective much closer to our personal finance route. An article in from the Wall Street Journal two weeks ago commemorates the retirement this week of "one of the great traders of the mutual fund industry, John Laporte of T. Rowe Price New Horizons." Mr. Laporte looks for future growth companies, seeking "creative leaders, a strong corporate culture and innovative ways of doing business." It requires immense effort to find these companies, but once you have found them, they can be a huge source of profitability. One in eight small growth stocks becomes large each year and on that cusp, they generate as much as 62% on average. The advantage of this technique is that these are typically only available in small blocks, ideally suited for small investors.