The Motley Fool: Every Sunday, useful tips on investing
Q: Can you recommend any books on value investing?
A: Try “Value Investing: From Graham to Buffett and Beyond” by Bruce Greenwald et al. (Wiley, $20), or “The Intelligent Investor” by Benjamin Graham (Collins, $23). “One Up on Wall Street” by Peter Lynch and John Rothchild (Simon & Schuster, $16), meanwhile, offers a good introduction to investing.
Dear Fool: In 2008, I’d just opened a brokerage account. Certain that the economic crisis presented all sorts of opportunities for bargain-hunting investors, I thought that Washington Mutual was “too big to fail.”
Obviously, I learned otherwise. I bought when the stock was already down, but I thought all the selling was due to unwarranted panic, and if I just held it long enough, it could make giant gains.
As the price kept falling, I got gutsy and bought even more. Then one day I learned the bank had been forced to close. I thought there would be some kind of warning before this happened, so we stockholders would have time to sell. I lost every penny I’d put in it.
The Fool responds: Often, as soon as bad news is announced, a stock will immediately trade at a lower price. The trick is to stay on top of a company’s progress and to get out if you no longer have faith in it.
Unfortunately, once a company files for bankruptcy protection, most stockholders will get little to nothing.
If your portfolio could use a solid, dividend-paying blue chip stock, take a look at General Electric (NYSE: GE).
The company’s recent fourth-quarter earnings report featured revenue up 4 percent and earnings per share up 11 percent.
Fully 35 percent of profits were from its energy businesses, including power and water, oil and gas and energy management. The company’s backlog of booked orders hit a record high, at $210 billion.
GE’s dividend recently yielded 3.4 percent, and the payout has been hiked five times in the past three years.
GE has also been rewarding shareholders by buying back shares and reducing its share count, which boosts the value of remaining sh
GE also controls more than 40 percent of the American wind-turbine market and 35 percent of the global natural-gas-turbine market.
The company is reducing its focus on financial services, while expanding its work in energy, health care, aviation, mining, infrastructure and more.
It’s also got a hand in some next-generation technologies, particularly the industrial Internet, which could be the connecting backbone that ties all of GE’s disparate manufacturing and services segments together.
Data analytics is still a young industry, and the opportunities for optimization are immense.