3 of 'The Dogs of the Dow' are Warren Buffett Stocks: Time to Buy?
Stocks owned by legendary investor Warren Buffett are not generally associated with the word "dog."
As such, each is a "Dog of the Dow," the moniker for the bowsers that underperformed the other members of the esteemed index of 30 highly-regarded, publicly-traded companies. That naturally raises the question for all investors of, "Is it time to buy?"
Due to the bull market, all fell far short of the performance of the exchange-traded fund for the Dow Jones Industrial Average, SPDR Dow Jones Industrial Average (NYSE: DIA) which is up nearly 25 percent for 2012.
Coca-Cola led the Dogs of the Dow owned by Buffett, up more than 13 percent for the year. Over the same period, Exxon Mobil has pumped higher by just over 13 percent, with a significant recent jump due to the announcement of Buffett's buy of 40 million shares. IBM has fallen by more than 2.5 percent since the first of the year.
Another legendary investor, Shelby Davis, used to reply, when asked about the best time to buy stocks, "When you have the money."
Long-term investors should look upon the performance of these stocks as an opportunity to buy, if they "have the money."
It is impossible to time the market. Each is a well-run company with excellent management and a solid brand (if not, Buffett would not own millions of shares of each), which makes any period a good time to buy. For the long term, each also has a formidable "economic moat" that "The Oracle of Omaha" looks for in an investment. That is the set of assets that protect a business from competition and time.
For the long-term investor, Coca-Cola, Exxon Mobil and IBM should prove to be solid buys. Each pays a dividend with a history of growth, which will add to the total return over time. Buying shares of companies owned by Warren Buffett that are trailing the market should be a profitable strategy for the years ahead.
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