Top Analyst: A Better Way to Save for Your Kids' College
From Wealth Daily:
"Where would you put money today in order to reap the large returns in fifteen years?
The Sam Walton biography tells the story of a truck driver who worked for Wal-Mart and retired a millionaire on WMT stock alone...
Or John Templeton, who bought Freddie Mac in 1980 for his wife's retirement fund and turned $3,000 into a million as interest rates fell from 21% to 8% and housing took off.
The trick isn't to buy high and sell higher; it's to buy low in a company that will likely be around and thriving in 15 years.
The lost decade
There is one sector that is cheap, solid, pays dividends, and is expanding: the old school tech plays that no one wants to talk about.
Let's take a step back and look at why these stocks are so cheap.
The first reason is that they got ramped up in the 1999 dot-com bubble. All of these stocks like Oracle (ORCL), Microsoft (MSFT), Intel (INTC), Qualcomm (QCOM), Cisco (CSCO), and Corning (GLW) were trading at price-to-earnings ratios over 100.
They split their stocks again and again so that Oracle has 3.8 billion in their float. Microsoft has 7.5 billion.
There are so many shares out there that Wall Street can't play their typical games. The only things that will move these stocks today are earnings and growth.
Furthermore, the last great business boom cycle was in 2000. The Y2K bug scared everyone into upgrading their systems.
This put a damper on the first half of the last decade, as spending on business tech dropped. This was followed by the international banking crisis and housing bubble.
The Fortune 500 cut back on all spending, slashed jobs, and hunkered down.
What this means is that there are now many business who are working with long outdated systems.
Welcome to today: Y2K plus 11
Businesses in the Fortune 500 are sitting on more than a trillion dollars in cash. Money market funds are making less than 1% and inflation in corporate costs such as commodities are rising quickly.
Therefore, these companies must put their money to use.
Barron's speculates 250 billion will go into mergers and acquisitions this year. Some will go to increased dividends, and some will go toward increased productivity gains though upgrading tech hardware and software.
Here is some proof..."