Growing Rich - Arabictrader.com

Rule 2
INVEST LIKE A TORTOISE,
PROFIT LIKE A HARE
Donald Yacktman likes to compare himself to the tortoise in that
famous story about the tortoise and the hare. You remember how it
goes. The tortoise can’t run as fast as the hare, but by staying on
course, it still manages to win the race. Likewise, although Yacktman
has never been one to churn out a quick buck in the market, he’s
made his shareholders rich over time. He sticks with his discipline in
tough times. In fact, his investment style has been out-of-favor for
the past several years, causing the performance of his funds to significantly
trail the overall market in both 1997 and 1998. Nevertheless,
Yacktman insists he’s not about to change his ways. “Like the tortoise,
I may appear to be a little slow at executing my strategy at times,”
he says. “But that’s what happens when you’re looking to give investors
the highest possible return with a minimal amount of risk.
After all, I believe investing is a marathon, not a sprint. Consequently,
I have a longer time horizon.”
Yacktman looks for similar characteristics in the companies he invests
in. He prefers to own steady, predictable businesses he can hang
on to for years, if not decades, to come. He doesn’t want to worry
about whether their products will soon become obsolete. For that
reason, he often avoids small and unproven companies, especially
those in the technology arena. “To me, they’re like Roman candles
and shooting stars,” he says. “What’s popular today might not even
be around tomorrow.”
That’s one reason why Yacktman also stays away from generic
financial stocks. “They generally have mediocre businesses,” he rationalizes.
“A standard run-of-the-mill bank or insurance company, for
instance, doesn’t appeal to me, although I’ve been in Freddie Mac,
Sallie Mae, United Asset Management, Salomon Brothers, and Morgan