24 Stocks to Watch

The Cooler Is Me

April 23, 2009: 12:17 PM ET

jackfreezingI was perusing today's gallery of top performing Fortune 500 stocks on CNNMoney.  Some are well-known, like Wal-Mart (WMT), McDonald's (MCD) and the repository of their activity, Waste Management (WMI). Others, like C.H. Robinson Worldwide (CHRW), which is a logistics provider, are less intuitive.  But scanning the 24 bear baiters, I realized they all had one thing in common.

I don't own any of them.

Not W.R. Berkley (WRB), the insurance holding company, not Darden Restaurants (DRI), which brings families together over steaming plates of shrimp and/or fettucine alfredo at the Red Lobster or the Olive Garden. Not a share of either. Not even Pulte Homes (PHM), which builds, obviously, homes. I could have bought some at some point, I suppose. But I didn't.

There are two ways to look at this. One is that I'm stupid and should have somebody providing me with sound, reliable investment guidance. While this is quite possibly true, I believe it ignores the real, underlying phenomenon at work here, one that is backed up with ample evidence.

These 24 companies are doing well for the simple reason that I am not invested in them. That's the cause that has produced this happy effect in each and every one of them.

Let's look at the record. In the early 1990s, I invested in a number of tech companies that had been doing very well indeed. Immediately thereafter, they all went into the tank. I'm not talking weeks later. I'm talking hours later. Like, I bought a stock and that afternoon it lost 10% of its value. The next day another 15%.  By the end of that week, down 55% and falling. My broker, as they will, usually told me to hang on until the next upturn, which then did not arrive, ever. On several occasions, the upturn did come, though, but only after I sold the stock. And I'm not talking about weeks after, either. Again, hours. Like, I would sell and within minutes the security would experience a significant and inexplicable bounce.

But it wasn't inexplicable to me. It was me. I did it.

About 10 years ago, I decided it would be smart to stop messing around with high-risk, fast-growth companies and go with conservative, blue-chip firms that had produced value year in and year out. You know the companies. I'm not going to mention them. I don't want to hurt them. They employ many nice people and I have nothing against them. True, I lost money with every single one. But that's not their fault. I'm sure they wondered why their stocks were down. Now they know. It was me. Many are still languishing at fractions of the value at which I bought them. That's because  I still hold them. The ones I sold at a loss are doing better now.

Most recently, I purchased Google (GOOG) at $700. You know how that's doing. Analysts are still a bit flummoxed as to why this great company is now trading at a less dramatic multiple than before. Some ascribe the decline to the challenged advertising market. Others cite the economy. It's none of those things. I think we can now be relatively confident about the true reason. It's me.

So as I look at this list of companies that are facing the recession and achieving uncommon success, I come to one conclusion. As tempting as a call to my broker would be, I will refrain. I have incredible destructive power within my grasp, and I have to use it judiciously. This recovery that's in the wind is a delicate thing and I'm not one of those guys who's looking for ways to kill it.

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