Markets
Ordinary Investors, Extraordinary Results
Seven people just like you share the secrets of their success.
From Kiplinger's Personal Finance magazine, August 2006
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Vince Tranchita, 75
Started investing: 1963.
Focus: Blue-chip stocks.
What stands out: Unusual patience and discipline.
His advice: Buy and hold the market leaders.
Vince Tranchita bought his first stock, Pittsburgh Plate Glass, in 1963. Although its name has changed (it's now called PPG Industries), he remains a fan because of its consistent profitability and loyal customers. Says Tranchita: "When I buy a stock, I plan to hold on to it for the long term."
Tranchita has taken that statement to the bank. His other hard-and-fast rules: Stick primarily to industry leaders, and buy growing, dividend-paying blue chips when they're selling at reasonable prices. And insist on companies with ethical managers who align their interests with those of shareholders. The approach has paid off handsomely for Tranchita, who has built a substantial nest egg from his investments in the stock market. "Stocks have been very good to me," he says.
Tranchita, who lives in the small town of Cassville, Wis., avoids highfliers. "The price-earnings ratio is probably the most important number to me," he says. "I don't like to buy something selling at more than a P/E of 25. That's why I didn't get into tech and telecom in the late 1990s."
Central to Tranchita's success is that he enjoys investing and devotes a lot of time to it. "It's been a hobby for me over the years," says Tranchita, who retired in 1998 as president of a towboat-service company. "I've been a subscriber to Kiplinger's, and Value Line Investment Survey is almost like my bible. You need to do your homework before you buy a stock." He also reads Standard & Poor's reports at the library and consults Morningstar for help with mutual-fund analysis.
When he latches on to a good company, he will often buy more shares when the price dips. He's owned Intel for seven or eight years and has regularly added to his position. "I'm still underwater on it, but I believe in the company," he says. He's also sticking with General Electric and Microsoft, two stocks that have made him money in the past but haven't moved in years. "GE is a leader in practically everything it does, and while I'm waiting I collect a 3% dividend. Microsoft is still the leader, and it has a ton of cash. When those stocks drop, I buy more."
What has probably helped Tranchita as much as his knowledge is his equanimity. "There will be ups and downs," he says. "If you diversify enough, you're going to be all right. You need to be able to sleep at night. If you can't, you should give your investments to someone else to manage." The hardest thing, Tranchita says, is knowing when to sell: "If a stock doesn't perform after a long time, you should get out of it unless you're still convinced it's a great company." He also sells if he learns of ethical lapses by managers.
Tranchita doesn't ignore mutual funds. He owns such long-term winners as Fidelity New Millennium and Columbia Acorn (which he bought before it imposed a sales fee on new investors). All told, he has a third of his money in stock funds, a third in stocks and a third in municipal bonds.
--Steven T. Goldberg