Swing for Singles

June 6, 2016

"Don't worry about home runs, swing for singles." To this day I can hear my dad repeating that line to me as I was learning to play baseball. In other words, don't try to do too much, just be consistent. Excellent advice - and probably why this article recently caught my eye. Focusing on hitting singles is a great investment strategy - one that brings with it potential for strong returns over time.

Let's go back to baseball. What kind of player is a "singles-hitter?" Consistent. Steady. Dependable. A quick look at the best "singles-hitters" of all-time reveals an impressive list of names. Pete Rose, Ty Cobb, Derek Jeter, Ichiro Suzuki, and Hank Aaron all make the cut. All are members of the Baseball Hall of Fame (as are many others on the list).

So, what kinds of investments could we consider "singles-hitters?" Companies that have increased their cash dividends for at least 25 straight years (consistent). Companies that have averaged a return that beats the S&P 500 over the past 20 years (steady). Companies that outperformed the S&P 500's loss of over 50% during the Great Recession (dependable). Here are some examples, compared with the S&P 500 over the same period of time.

None of these names are very exciting, or would bat cleanup for the New York Yankees. Amazon.com, Apple, or Facebook don't make the cut. Procter & Gamble makes toilet paper, diapers, and toothpaste. Johnson & Johnson is known for Band-Aid and Tylenol. RLI is an insurance company. McDonalds is Big Macs and French Fries.

Rarely will you see any of the names above mentioned as exciting investments that are ready to pop. That's good with me. I'm not looking for home runs - singles will do just fine.

Note: The foregoing has been prepared solely for informational purposes, and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. Information provided is not an inclusive summary for making an investment decision.

Chuck Wade, Financial Advisor

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).