A.I.M. Users Bulletin Board

[ls7550]

Hi Neko

Kevin McDevitt's your man.

30 original stocks, just bought and held since 1935. Now down to the low 20's (large chunk in BRK-A holdings and even larger in XOM (around a third of the portfolio value combined)).

the only way that new stocks could enter the portfolio would be through spin-offs or mergers and acquisitions. On the other hand, a company would only be sold if it suspended its dividend or was in danger of being delisted or going bankrupt.

So some periodic capital gains as it transforms (its more of a trust that a managed fund), but potentially years between such changes. Along with dividend taxation as well.

With initial equal weighting bought and held typically a few will be terrible and maybe even fail, most will underperform the average, a few do incredibly well. A capital gain risk factor is that one of the few that have done incredibly well being taken over or whatever, that generates a capital gains tax event. So whilst regular capital gains might be low/zero, there is a risk that a strong performing stock that is relatively heavily weighted could for instance be taken private and sold by the fund, generating a sizeable capital gain event.

Regards. Clive.