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November 7, 1999 A year ago I published a table of the 30 stocks that make up the Dow Jones Industrials index, along with an analysis of each based on the methods of Warren Buffett, as described in Mary Buffett's book "Buffettology." The bottom line was the expected rate of return after five years, including dividends and allowing for taxes. Here is what those stocks look like a year later.
1998 1998 1999
Symbol Price 5yr RR Price Comments
KO $73 30.7% $58
IBM $75 29.7% $90 Adjusted for 2:1 split
CAT $49 26.2% $55
PG $90 21.0% $106
ALD $42 20.5% $56
(top five up 11% as a group)
UTX $49 19.9% $56 Adjusted for 2:1 split
MRK $72 19.2% $80 Adjusted for 2:1 split
AXP $97 19.0% $150
UK $45 18.6% $61 Removed from DJIA
MO $53 18.5% $25
JNJ $82 17.8% $106
WMT $35 17.5% $58 Adjusted for 2:1 split
T $43 16.6% $47 Adjusted for 3:2 split
MCD $34 15.6% $47 Adjusted for 2:1 split
GE $90 15.2% $134
HWP $63 14.2% $78
AA $39 13.6% $61 Adjusted for 2:1 split
S $47 12.9% $29 Removed from DJIA
GT $56 11.3% $37 Removed from DJIA
CCI $46 10.7% $54 Citicorp & Travelers merged = C
GM $67 10.3% $69
XON $74 9.1% $71
MMM $81 8.9% $97
DIS $30 7.8% $24
JPM $104 7.2% $136
(bottom five up 2% as a group)
CHV $83 6.5% $86 Removed from DJIA
DD $62 5.5% $63
IP $46 1.7% $55
BA $42 -1.8% $44
EK $78 -3.4% $69
As you can see, Buffettology was by no means a crystal ball, yet the more highly rated stocks did tend to do somewhat better. Buffett's methods are based on the long run, and one year is hardly that. Anyway, let's update the Buffettology statistics for the Dow 30, which as of Nov. 1 includes Microsoft and Intel and two other new stocks. Symbol Price Earn Div Book 5yr Price Divs AfterTax 5yr RR IBM $90 $4.22 $0.48 $10.34 $575.36 $9.71 $394.01 39.9% GM $69 $9.20 $2.00 $25.13 $312.28 $31.74 $214.08 32.7% MSFT $92 $1.51 $0.00 $5.37 $404.95 $0.00 $250.71 30.2% INTC $82 $2.09 $0.12 $7.70 $323.15 $1.72 $193.67 27.4% MRK $80 $2.37 $1.16 $5.52 $263.98 $14.74 $155.88 24.1% ALD $56 $2.61 $0.68 $9.13 $175.78 $8.42 $101.26 23.0% AXP $150 $5.25 $0.90 $21.74 $447.36 $10.73 $244.63 21.4% SBC $51 $2.21 $0.97 $7.32 $131.06 $10.43 $70.21 18.8% WMT $58 $1.10 $0.20 $5.16 $152.35 $2.19 $76.76 18.4% PG $106 $2.58 $1.28 $7.79 $267.27 $13.64 $137.44 18.1% EK $69 $3.67 $1.76 $12.08 $165.72 $18.21 $88.74 18.0% HD $78 $1.28 $0.16 $6.76 $195.69 $1.70 $95.19 17.3% MCD $47 $1.29 $0.20 $6.69 $115.02 $2.10 $56.10 17.1% KO $58 $1.24 $0.64 $3.83 $139.19 $6.59 $68.87 16.9% GE $134 $3.11 $1.40 $12.08 $295.99 $13.69 $138.15 15.2% MO $25 $2.52 $1.92 $6.65 $42.71 $15.76 $23.43 14.0% BA $44 $2.24 $0.56 $13.19 $90.98 $5.22 $40.51 13.9% JNJ $106 $2.52 $1.12 $10.97 $216.89 $10.45 $95.48 13.8% HWP $78 $2.92 $0.64 $18.66 $155.02 $5.86 $65.49 13.0% MMM $97 $3.86 $2.24 $15.33 $176.66 $19.39 $75.80 12.3% AA $61 $2.52 $0.75 $16.10 $114.41 $6.59 $46.59 12.0% CAT $55 $2.79 $1.30 $15.22 $95.89 $10.95 $39.59 11.5% C $54 $1.79 $0.56 $12.77 $94.41 $4.69 $34.89 10.4% UTX $56 $2.14 $0.80 $14.84 $93.86 $6.57 $34.39 10.1% JPM $136 $8.17 $3.96 $64.52 $198.36 $29.82 $68.28 8.5% DD $63 $2.14 $1.40 $12.73 $87.90 $10.28 $26.49 7.3% T $47 $2.16 $0.88 $22.99 $65.06 $6.41 $18.35 6.8% DIS $24 $0.73 $0.21 $10.05 $32.91 $1.51 $7.80 5.7% XON $71 $2.13 $1.76 $17.62 $80.00 $11.36 $14.43 3.8% IP $55 $0.45 $1.00 $25.17 $47.84 $5.56 -$2.04 -0.8% It's interesting to me that Microsoft and Intel do not come out on top - even General Motors beats them out, of all things. Of course, GM is regarded as a mature, cyclical stock, with high earnings now because we are enjoying boom times. If there's any hint of a recession, it's very easy for people to put off buying a new car. Stay tuned! © Copyright 1999 by Richard Gillmann. All Rights Reserved. |