Tuesday, March 29, 2005



My thanks to Eric Levitt for posting my "big picture" comments to his blog. One of the things readers can learn from Eric is to moderate their enthusiasm to "run in crowds". Such notable investors as John Maynard Keynes, Sir John Templeton and David Dreman, to name just a few, have done well by buying what was or is unpopular. Eric and I have each posted comments about the piles of money flowing into developing country funds. Like Keynes said, in economics, the majority is always wrong. Sure enough, Brazil, Mexico and other funds have done poorly in recent weeks.

Several weeks ago, I wrote that big cap American Companies are the ones to own in this market. Take a look at what has been happening. Companies such as GE and Boeing have done well. XOM and GE have played tit for tat to claim the biggest company prize. Not all of the big names have gone up but few have been slammed like some of the developing country funds.

Congratulations to my Mom. She has the patience required to be a great investor; day after day she is being rewarded with good news. Her Norfolk Southern Corp just made a deal with the Canadian National Railway. The deal will ease traffic in the Chicago area and benefit both firms. For a year or so I have suggested that the day may come when Canadian National buys NSC. My family does not own the stock because it has take-over potential. We like the company because it is enjoying very high operating ratios; in other words we like it because it is making money. A take-over would be a bonus but it is not necessary for our investment success. I thank my Mom for taking my advice to buy the stock and for her patience.

The other reason to bring up Mom's account is to say to you, you can do just as well as Mom. You do not need to pay a fee to a mutual fund to own NSC and other good companies. The brokerage fee to buy $2,000 or $10,000 worth is only $5. There is no carrying charge. A fund might charge $70 to $200 per year to hold Mom's NSC for her. As it is, her $5 cost gets to be a bigger bargain every year.

I hope you will listen to Eric and others who do not push you into high cost products. One of the secrets to market success is to avoid unnecessary fees. If you wouldn't pay a gas station an annual fee for the privilege of buying gas at the station, don't pay 12b-1 and other unnecessary fees!