August 7, 2012
Investors are always trying to beat their benchmarks, and for many that's the Dow Jones Industrial Average, but investors will never beat the market by investing in it passively. They can, however, over-weight great companies and under-weight or ditch the losers.
So, in an effort to beat the Dow with its own components, I'm taking a buy, sell, or hold stance on each individual stock.
Up today is Kraft, a stock I have previously been bearish on, but have come around to a hold stance. While I prefer companies keep divisions in-house for economies of scale and a built-in hedge, many times this ties up a lot of value as well. In Kraft's case, the global economy growth story is increasingly diverging with our own domestic economy. For that reason, it's worth investors hanging onto shares of Kraft today to see how the spinoff fares and then plant their flag in one division or the other depending what your portfolio is looking for.
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