Think in Terms of Total Return

Another key component for successful investment management is to think in terms of the total return expectation for each and every investment one makes (including cash).

• the price you pay determines your return.....therefore the lower the price the better the returns
• Graham: "Buy stocks like you buy groceries, not like you buy perfume."
• Example: Buying Coca Cola stock at 50% off today's price will enhance returns nicely over a long timeframe (say 20 years, until the time you really need to "liquify" the holding if at all).
• Again, when you look at your statement each month and see the $ figure of your portfolio, that represents ONLY the amount you would receive if you liquidated your portfolio TODAY. It DOES NOT represent the VALUE of the ultimate liquidation date (which is more than likely many years ahead). Seeing that you are likely to be a NET PURCHASER of holdings until liquidation is required, you want a LOWER price , NOT a higher one.
• SO if I am able to buy Coca Cola stock at a 50% discount today, I love it because it enhances my TOTAL RETURN expectations until I will want to sell (which includes the dramatically increased dividend yield as a result of the lower price)