End of Year Investment Report – 2009

The Guts of the 3M Investment Club—A Different sort of Year-End Report

Team,

We started depositing money into our club nearly eleven years ago. 

It’s not an understatement to suggest that we started investing at the wrong time. 

Like most people eleven years ago, we got caught up in the trap of wanting to buy stocks because…wait for this one — they were becoming more expensive!

Of course, in our eyes, they were becoming more profitable.  But we didn’t understand history.  When stocks are rising quickly, they’re dangerous.  And when we began investing, the S&P 500 index had been compounding at 18% annually since 1982.

After many years of such easy returns, the markets needed to take a break.  And they did take a break.  If you have a look at the below chart, you can see that money invested in the S&P 500 index 10 years ago would be worth less today than in 1999. read more…

But during the past decade, we continued putting money in the markets and we turned it into profits.

When I asked you, as a group, to be greedy when others were fearful, you responded really well.  It takes a lot of guts to put money into an investment that the media (not to mention the person in all of our heads) is suggesting that we shouldn’t.

But when I asked you for money, you responded, and we were able to buy strong businesses that very few people wanted at the time.

You know when a stock is popular because the price rises.  But we didn’t buy anything “popular” and we reaped profits from that.  I thought some of you might be interested in seeing the guts of what we own, what average prices we paid, and what price ranges those stocks have gone through, using a five year chart.

To read more about the individual investments of the 3M investment club, please login with your password — the post is immediately below, or click here