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Stocks To Buy And Hold Forever
Market players want to know which financial instruments or stocks they can buy and hold forever. What do they mean by buy and hold forever? I never asked that question before because I can adopt a short, medium or long term view. Without keeping you waiting any longer let's jump into it right way.
Meaning Of Holding Stocks Forever
Generally, forever in this case means for a long time. It can just mean for as long as one can hold a stock until there is no more juice left in it to squeeze out. It can also be ten years or maximum 20 years. That is really what investors are thinking about when they want to buy and hold forever.
Should One Buy And Hold Forever
Personally I will not buy and hold an asset forever (proper sense of the word forever) because I believe one will be leaving so much money on the table.
As a more agile financial market player, I will prefer to hold an asset only for the duration of the trend. A trend can last nine years before a correction. And I will start loading it more at the end of the correction if there is still value in that company. I believe one that holds a stock forever does not understand the financial market cycles.
All companies do go through difficult times, and there are also global economic downturns. Personally, I am always looking for both the capital gain (or growth) and dividend incomes.
Really, many do not want to become a sophisticated market player. Note that it can take a company even up to nine years to come out of the corrective phase. One example amongst others is Microsoft stock that was in a corrective phase from 2000 to 2009.
In that case an investor who only uses the financials, but ignores the Elliott wave principle that bought Microsoft stock at the top of the bullish trend in February 2000 has to painfully wait until 2016 before breaking even. Well, you get the picture. There must be a better way.
Why Buy And Hold Forever?
Income investors are always looking for stocks or financial assets that they can buy and hold forever (for a long time). They are expecting regular quarterly dividends years after years. Their first concern is to be sure that those dividends will be coming in. And as long as they are regularly paid that love affair between the long term investors and companies will remain intact.
Some long term investors do also reinvest all the dividends by using a carefully crafted dividend reinvestment plan that work. The main reason why long term investors do buy and hold for a long time is because of the dividend's income and rarely for capital growth. I wonder why they leave so much money on the table by neglecting the capital growth.
Which Stock Should One Buy And Hold Forever?
That is an essential question that many traditional investors are putting into major search engines. There are many factors one must consider when searching for long term investment financial instruments.
The first factor one must check is the strength of the balance sheet. If the company does not have a strong balance sheet one is more likely to quickly feel the stress. Never buy and hold for a long time (forever) a stock that has failed the George Beaulieu Google finance acid test unless one is taking a calculated risk.
The second factor that will influence a buy and hold forever strategy is the ability or history of that company to pay regular quarterly dividends. One should avoid companies that do not pay regular dividends.
The third factor to consider when buying and holding for a long time is the management. That is a factor that many buy and hold forever market players do often forget. One does not want to forget or compromise that point.
Indeed, a reputable CEO is always needed to defend, protect and boost investors' value over a long time. Many smart long term investors will not hesitate to vote with their feet if a mediocre CEO or management team is in place. In fact long term investors do follow the sharpest brains and solid hands in the financial markets. Investors were putting their money on Elon Musk, Tim Cook and Bill Gates over the years.
The fourth factor that one will check is both time and price. The time when one is buying the asset and at what price. Two elements are critical in any financial markets dealings. One wants to buy the stock at right time like a farmer who knows the seasons, and one must buy low or below the net asset price or at a reasonable price.
One does not want to be the fool in any stock market transaction. It does not matter what strategy one is deploying if one can buy at the right time and price, one will be alright.
The fifth factor is what I call the shark tank verification. I mean one wants to ascertain that the company has a brighter future. Are they making money? Can they handle their competitors? What is the future of that sector? All in all, one wants to know whether this is a serious business proposition?
The sixth factor is the market cycle. A long term investor ought to familiarise himself or herself with the financial markets cycles, and trends. I will not say more because it is obvious. Isn't it?
Blue Chip Stocks
Blue chip stocks are stocks that are listed on major stock indices such as CAC 40, DAX 30, NASDAQ 100, DOW 30 and so on.
Moreover, many institutional investors do buy and hold those stocks. Therefore, one is less likely to face liquidity issues when it comes to loading or off loading the shares. I mean, one does not want to buy and hold forever (long time) illiquid financial instruments that no one is trading.
One is more likely to find excellent buy and forever candidates among the major indices' components.
Allow me to remind people one more time that the price and time do count in every financial market dealing. Please feel free to quote me anywhere.
IPO Stocks For Long Term Investors
Most long term investors are also IPO market player. IPO stands for Initial Public Offering.
Quite often a healthy business may be a little bit overpriced during the IPO. Consequently, the price will rise before declining or it will decline right away before starting a fast bullish run.
Alright, I do want to talk too much today. What is going to happen is that those that are more patient but agile market players uncover precious (golden nuggets} long term stocks.
One of the advantages of finding those IPOs is that one is buying at the right time and price. I do not know about you, but I will love to buy that stock at the early stage at the right time and price if it is still a sound long term business proposition.
Warning Though it is crucial that one buys at the right time and price, one must not forget other factors that I have already highlighted. Is it a good business proposition or a useless financial instrument that will no go anywhere.
I will not discourage investors for looking for buy and hold forever stocks. The challenge is to find those stocks that are in a mega bullish financial market trend.
Though some of those trends can last for twenty years, in my opinion the term of a buy and hold forever should be either five or ten years. One can still join the subsequent impulse wave during the trend after the 2nd and 4th wave corrections.
One factor that is critical is the dividend. It has to be a company that is paying regular dividends year after year. That is non negotiable. The last thing to remember is one must buy a healthy (quality stock or asset) at the right price and time.
Well that is it. I hope it was not too much for you. As always I enjoy writing this article, and I hope it is useful to you. If you think I have done a very good job here, please share and bookmark it and say few good words about us in your number one investing forum. I will really appreciate that.