Invest Like J.R. Ewing
It's a tough admission to make, but we're all friends here: Lately, I've taken to watching old DVDs of Dallas. It's become a vice I can't shake. And, much to my surprise, I'm learning a lot about investing from the adventures of the oil-rich Ewing family, especially the sly, conniving older brother, J.R.
No, I have no plans to become a slick, philandering, back-stabbing oil baron. But I do want to add a little black gold to my portfolio's returns, and channeling a few choice J.R. Ewing traits may be just the ticket.
Villainous TV Traits and Compelling Investing Returns
J.R. never let personal relationships get in the way of a good deal. He didn't play favorites with family or friends, and he kept his eye on the goal all the while.
J.R.'s emotional detachment may have made him a lousy husband and brother. But it also made him an excellent investor.
He's got many real-life counterparts who prove that this unbiased -- if not perhaps as seemingly ruthless -- money mind-set works. J.R. would be right at home with one of Warren Buffett's most-quoted phrases: "Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1."
For fearlessness, consider investing icon Peter Lynch, who said, "The key to making money in stocks is not to get scared out of them."
Now that's something a good Texan like J.R. could get behind.
Stop Sugar-Coating Your Stocks
We could stand to do the same in our own portfolios. We all want the best for our portfolio -- but wishing for the best doesn't make it so.
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Most of us have bought some stocks over the years and held them for too long because we didn't see trouble -- we saw a company whose products we loved. Whether a company succeeds or flounders, keeping your investments at arm's length gives you a more detached, unbiased view of their actual progress.
Let's do a little J.R. exercise. Consider the following seven stocks and some of the qualities that pull on investors' heartstrings. What would J.R. do?
Company | Emotional Ties | Gain in Share Price Over Past Year* | What Would J.R. Do? |
Starbucks (SBUX) | Good coffee, typically good service, ubiquity | $13.30 | Though it's hit some bumps along the way, the company continues to grow. J.R. would probably hold. |
Krispy Kreme (KKD) | Great, addictive doughnuts | $2.53 | This company's financials have been going nowhere for much too long. J.R. would sell, and he wouldn't think twice. |
Whole Foods (WFM) | Good-to-gourmet foods, nice atmosphere, socially responsible | $32.56 | J.R. would probably scoff at the healthy-granola image Whole Foods emits, but even he can't turn down a good growth story, so he'd probably hold. |
Sirius Satellite (SIRI) | Satellite radio you can take anywhere | $0.48 | For all its hype and hefty following, J.R. would probably give up on this stock because of its continual lack of substantial earnings. He'd take his existing gains here -- if he made any! -- and find another company. |
Harley-Davidson (HOG) | The name in motorcycles | $7.08 | Who doesn't love the Harley image -- and its continuous growth? J.R. would probably survey the long-term prospects and deem this company a buy. |
Apple (AAPL) | User-friendly computers, smartphones, tablets, and other technology that's always slick and "cutting-edge" | $110.15 | The stock has soared over the past year, and regardless of the recent resignation of CEO Steve Jobs, the company continues to release new products to great fanfare. At this price, J.R. would probably hold. |
Dell (DELL) | Inexpensive computers custom-made for individual users, good service | $2.19 | Is Dell's PC dominance over, or can it rekindle its momentum? J.R. would likely hold -- cautiously. |
Once You Sell, Don't Look Back.
TV villains don't waffle. They don't suffer from sudden bouts of nostalgia or lose sleep about decisions that line their pockets at the expense of cutting ties. J.R. never had a problem cutting a loser loose, and neither should you.
Yes, it's difficult to say goodbye to a stock you once loved when the chips are decidedly down. But if I'm going to watch my portfolio grow throughout the decades, I've got to be just a little bit ruthless. I think J.R. would be pleased.
Hope Nelson-Pope is online coordinating editor at The Motley Fool. She owns shares of Starbucks and Apple. The Motley Fool owns shares of Starbucks, Whole Foods, and Apple. Motley Fool newsletter services have recommended buying shares of Apple, Dell, Whole Foods, and Starbucks, as well as creating a bull call spread position in Apple.
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