The Large Cap Blue Chip stocks do offer you a degree in safety in that they have a lot of resources and thus can most often work their way through problems. Such companies experiencing (hopefully) temporary problems can be a good investment.avalpert wrote: ↑Sun Sep 03, 2017 12:36 pmBut there is little reason to expect a relationship between the quality of a company from an investment perspective and whether you happened to hear of the brand or not. So calling it 'quality' is just a way of misleading yourself into thinking it has something to do with the quality factor.snarlyjack wrote: ↑Sun Sep 03, 2017 12:33 pmAvalpert,
Ok...I get it.
Let's call it "Quality".
I like quality stocks that I've heard of.
I like "warm fuzzes" & sleep at night factors.
I like the phrase my portfolio "is spinning on a stick
spitting out cash" or "I can sit back in the weeds &
wait it out without losing any sleep".
Those are my "sleep well at night factors" ...
Your 'sleep well at night factors' may be doing you a huge disservice.
Branding is another good thing and provides another degree of safety. Pretty much, an object in motion tends to stay in motion. A good brand means that there are a lot of loyal customers. Well established brands tend to have a momentum of their own and reputation alone can carry a company for a long time.
The thing is, you can have a great company but a poor stock. If perfection is priced into the stock price, future returns will tend to be disappointing. You can overpay for a great company. So buying in at a reasonable price is a big factor too. I learned this the hard way from my Four Horsemen of Underperformance: GE, Pfizer, Microsoft, and AIG. Great companies but I didn't buy them as cheap as I thought. The last 2-3 years, Microsoft has actually turned into a good investment but it was pretty much dead money for several years.
As we all know, nothing is forever. Even great companies can eventually fail. The economy is dynamic and pretty much it is adapt or die. The thought is, buy the great Blue Chips and just put them away and never sell. There is a certain amount of truth to this but even a portfolio like this needs to be monitored and evaluated from time to time.
I do not recommend picking individual stocks, the indexes are awfully hard to beat. I have done it myself, beating the market over 1, 3, and 5 year periods but trailing over 10 and 15 years. Mostly I have bought well known names that should be familiar to Bogleheads, bought them at (mostly) reasonable prices, and have had long holding periods. So I did a lot of things right but still could not beat the benchmarks over longer time periods. And yes, these tend to be mostly Large Value stocks.
If you try to pick stocks, you will have a number of criteria you will utilize. I wouldn't just buy a stock because the company is well known and has a great brand, though those things are important.