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Buy and Hold Strategy Not Dead Yet for 94-Year-Old Investor

94-year old investor Edward Zajac
Zajac, at home in Henderson, Nevada, says he's been trading for 72 years and has made more than $2.5 million on equities. Source: Family photo via Bloomberg

Sept. 29 (Bloomberg) -- Stick with stocks, says investor Edward Zajac. He should know. The 94-year-old has been trading for 72 years and said he’s made about $2.5 million.

“I am a live, open-hearted investor,” said Zajac. “I’m willing to hold that stock 5, 10 years, if I have to.”

Zajac, who lives with his daughter in Henderson, Nevada, bought his first stock, Petroleum & Resources Corp., in 1937 while attending the University of Illinois. He’s invested full-time since 1968, after retiring from installing computer systems to travel the U.S. in a recreational vehicle with his wife.

He has stood firm even as many investors fled equities and hoarded cash since the financial crisis. More than $600 billion have gone into bond funds since the end of 2008, according to the Investment Company Institute, a Washington-based trade group. That’s even as 68 stocks in the Standard & Poor’s 500 Index paid dividends exceeding the average corporate bond yield of 3.8 percent as of Aug. 31, more than at any time in at least 15 years, data compiled by Bloomberg and Charlotte, North Carolina-based Bank of America Corp. show.

Individuals can make a profit in the market, according to Zajac, who said he’s in good health except for “numb feet.” He researches companies using Standard & Poor’s guidebooks at public libraries or more recently on a computer at home and places orders by calling his broker through a 1-800 number. As of September, his $412,000 portfolio held about 8 bond funds and 50 stocks, including Dow Chemical Co., International Paper Co. and Microsoft Corp.

EZ Method

He said he’s earned $2.5 million over the years using what he calls the “EZ investment method” -- after his initials. The six-step investing strategy fits on an 8-and-a-half-by-11 size sheet of paper and includes:

Seek firms with promising products, “like a hula hoop.”

Buy companies with an A or a B credit rating.

Pick stocks that are at least 25 percent owned by funds and institutions because that means smart analysts are recommending them.

Look at the stock’s high and low closing prices for the past two years. Don’t buy if the current cost is near the peak.

“I don’t play anything where the odds are against me. That’s why I don’t put a nickel in the slot machine,” he said. “I don’t buy anything on margin. None of this fancy puts, calls, futures.”

The price-earnings ratio, or share price divided by earnings per share, should be less than 16 while the dividend yield has to be 2 percent or higher, said Zajac, who only buys equities that distribute income. He prefers companies that have paid dividends consecutively for at least 10 years.

“There’s a lot of crime out there -- Enron, Madoff,” he said. “If a company isn’t paying out money I don’t know if they’re making it.”

Handwritten Records

Zajac has recorded his earnings in handwritten notebooks for decades and checks on his investments daily by calling his broker of almost 20 years, Chris R. Freymuller, a senior vice president of investments with Wells Fargo Advisors, a unit of San Francisco-based Wells Fargo & Co.

“He knows every penny of dividends and interest that hit his account,” said Freymuller, who is based in Salt Lake City. “He buys quality blue chips when they’re beaten down and they pay good dividends and he sells them when they come back.”

Zajac said he bought 100 shares of Caterpillar Inc. at $27 in March 2009, for example, and sold them this month at $70.

“I take advantage of opportunities,” he said. “If we have a second dip like they keep talking about, I’ll be in there with $100,000.”

To contact the reporter on this story: Margaret Collins in New York at mcollins45@bloomberg.net.

To contact the editor responsible for this story: Rick Levinson at rlevinson2@bloomberg.net.

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