Dear New World Investor:

Subscriber DT commented: “You wrote ‘The potentially “Never Sell” Stocks – and Why’ on October 4, 2007. A lot has happened since then. Looking at the rear view mirror, how would you say you did then picking long term holds? Are most of your predictions valid? If you were to write the same article today, what Never Sell stocks would you recommend?”

We’re in the quiet period for most companies, with little news coming before the earnings reports start flowing in 10 days or so. It is an excellent time to revisit the “Never Sell” list. The original write-up was in response to a question from subscriber Charlie:“Warren Buffet says that stocks you never have to sell are the best investments. Which of your stocks might I never have to sell? I don’t think they are the Top Buys, or am I wrong?”

As I told Charlie, he was not wrong. The Top Buys are a mixture of stocks at extremely depressed valuations relative to their potential, and stocks that have a news event coming shortly that should give them a meaningful jump in price.

The original “Never Sell” list, including what happened, was:

Affymetrix (AFFX) – sold because it licensed critical technology to competitor Illumina far too cheaply. That changed the balance of power in the DNA analysis industry overnight.

Amgen (AMGN) – still a Never Sell stock, with steady expected returns. But the only way to get high enough returns to make the New World Investor cut for a recommendation is to own the LEAPs, and they may not always be a sensible holding due to time deterioration of the option premium.

ERT (ERES – formerly eResearch) –

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