Long-term investing is an investment strategy where a position is taken in a stock, a market, a currency, or a commodity and is not sold for at least a few years. Proponents of long-term investing believe this buy-and-hold pattern will pay off in the long run.
The danger with long-term investing is staying with a position that continues to lose money. The most important aspect of long-term investing is to evaluate the investment thesis constantly. Things change. If the change alters the investment thesis, then an investor needs to sell and move on. If the thesis still works, then the difficult part is staying with a losing position until the market turns and proves the thesis right.
Oil prices are struggling to hold above $80.00 a barrel for West Texas Intermediate (WTI) crude. Even the more widely traded Brent oil prices are hovering around the $80.00 level. Excess supply—especially from the fracking for oil in the United States and the gush of oil that will come from the tar sands in Canada—is helping to drive oil prices lower. Then add in the slowing in Europe and China, and you have concerns on the demand side. In Economics 101, when demand declines and supply rises, a downward pressure on prices surfaces and that is exactly what is happening to oil prices. The oil ca ... Read More
The fear of Ebola has caused an increase in pressure towards the U.S. stock markets, particularly in the travel sector and aviation stocks. The concern is real, and if it is allowed to grow in the United States, Asia, or Europe, we could see a significant decline in travel demand that could impact the next few quarters, as my stock analysis would suggest. The impact on the aviation space has been evident already, as we have seen travel-related stocks come off their tops; albeit, much of this also has to do with the current stock market risk, based on my stock analysis. However, a big plus to the tra ... Read More
The world is not coming to an end—even if it does look that way as global stock markets plummet. Make no mistake about it; we are clearly witnessing some selling capitulation in the stock market. The bottom may be near for the stock market, or we could be in for further downside moves given that the correction on the S&P 500 has been around six percent, so there’s some wiggle room to the downside. After multiple records by the S&P 500 and DOW in September, the DOW is now in negative territory in 2014. Meanwhile, the S&P 500 was negative intraday on Wednesday pri ... Read More
October has provided the usual bouts of anxiety that have characterized the month in past years. I warned that we could see volatility and so far, this has been the case. From small-cap stocks to world-class blue-chip companies, we are seeing some selling capitulation emerge in the stock market. All of the major key stock indices are below their respective 50-day and 200-day moving averages (MAs). As I said in a recent commentary, the chart risk is high. Bearish investor sentiment continues to grip the stock market. We saw 354 new lows on the NYSE on Friday, followed by 308 new lo ... Read More
A sector that has truly benefited from the low-interest-rate environment over the last several years has been the automobile sector, which could now be an investment opportunity. Armed with financing rates as low as zero or free money, car buyers have been rushing to the dealers looking for a new set of wheels. Rising per-capita income levels around the world, especially in the emerging markets in China, Asia, and Latin America, have all combined to drive up demand. Investment guru Warren Buffett just announced last week that his fund Berkshire Hathaway, Inc. (NYSE/BRK-A) would add a majority stake ... Read More
With a long-term portfolio, the goal is to earn a constant rate of return over a long period. Sadly, even with this in mind, investors end up making decisions that jeopardize their long-term objectives. They make mistakes, but luckily, the effects of these mistakes can be easily controlled, saving their portfolio from disaster—it all comes down to these three principles of smart long-term investing that every investor needs to know when building their long-term portfolio. When There’s Rising Optimism, Go into Protective Mode Too ... Read More
One of the most hotly debated topics these days is the role of activist investors. Some people have the impression that an activist investor is not a positive factor when it comes to long-term investing. I disagree, as many times, the investment strategy recommended by these activist investors ends up benefiting all shareholders. Probably the most well-known, and certainly the wealthiest, activist investor is Carl Icahn. One of the things I like most about Icahn’s investment strategy is that he is willing to buy when others are selling and be vocal about his intentions. A pe ... Read More