12-08-2013, 08:22 PM
I also enjoy Tim's writing. He's a very smart young man.
It's impossible to know whether or not JNJ, or any other firm, will continue growing at a similar rate in the future as they have at any period in the past. That being said, I think it's likely JNJ will still continue growing at a rapid pace for the foreseeable future. The economy is totally different now than it was back in the 80's. It's a global economy now, instead of us vs. them. There are a lot more people alive now than there were back then as well. That means more people to consume their products. And the middle class around the world is burgeoning. There are billions of people around the world that can actually afford basic goods now, and have access to some semblance of modern medicine. In addition, demographics here in the U.S. bode well for JNJ with the boomers growing old.
However, JNJ doesn't need to explode. Steady growth over the long haul, coupled with reinvestment of the dividends means you're looking at solid risk-adjusted returns. In addition, as Tim pointed out you only need a few of these investments to pan out as expected. Diversifying across even more than 10 and having 90%+ of them succeed means one should do very well. I'm currently invested in 43 companies, so even if 3 go completely bankrupt over the next couple of decades (unlikely), the math is on my side.
Best wishes!
It's impossible to know whether or not JNJ, or any other firm, will continue growing at a similar rate in the future as they have at any period in the past. That being said, I think it's likely JNJ will still continue growing at a rapid pace for the foreseeable future. The economy is totally different now than it was back in the 80's. It's a global economy now, instead of us vs. them. There are a lot more people alive now than there were back then as well. That means more people to consume their products. And the middle class around the world is burgeoning. There are billions of people around the world that can actually afford basic goods now, and have access to some semblance of modern medicine. In addition, demographics here in the U.S. bode well for JNJ with the boomers growing old.
However, JNJ doesn't need to explode. Steady growth over the long haul, coupled with reinvestment of the dividends means you're looking at solid risk-adjusted returns. In addition, as Tim pointed out you only need a few of these investments to pan out as expected. Diversifying across even more than 10 and having 90%+ of them succeed means one should do very well. I'm currently invested in 43 companies, so even if 3 go completely bankrupt over the next couple of decades (unlikely), the math is on my side.
Best wishes!