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The BMW Method
Don't you Just Love it?

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By BuildMWell
January 26, 2005

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I am sitting here with CNBC playing in the background. They are going nuts because the DOW is up 115 points today. Somehow they forget that The DOW was down well over 115 points in the past two weeks. But, who cares?

What I see is nothing. To become at all interested in the daily, weekly or monthly moves in the DOW are a total waste of time. That is all about hype and hype is what messes people up.

After all, the DOW is just an average that is priced based on owning 30 stocks. It is fine for seeing the attitude of investors at any point in time, but it is nothing to get upset or excited about. To me the key is to own the right DOW stocks and to watch them...but not too closely.

Using the BMW Method, we can pick the best DOW stocks to own for the next two years. That is true at any time and our options are changing all of the time. However, I am not real big on buying Diamonds (DIA)the index that mirrors the DOW. That is because there are always DOW stocks priced at or near their 30 year high CAGRs while there are some at or near their 30 year low CAGRs. Why not evaluate them all and then own the cheap ones and pass up the expensive ones? Expensive in this case is defined as above the stock's historical average CAGR while cheap is below. Heck, I bet we could come up with a mutual fund that does just that...the BMW Diamond Fund.

This approach will maximize the dividend yield while it also maximizes our CAGR for the shares that we hold while we hold them. If the DOW grows at 8%/year, our investments should beat that by a long shot. At least, that is the BMW Theory.

So, don't you just love it? I like nothing better than having nothing to worry about. The market goes up and the market goes down and I couldn't care less. I love the long-term perspective. I hope I can encourage others to share that attitude.

Oh my! They just reported on CNBC that the DOW has given up that nice gain...it is just up 85 points now. That is fine by me...it changes nothing the way I see it. I know it will be over 15,000 in a few more years...history proves it.


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