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.
Recently, in the U.S. economy, we have been seeing decent jobs numbers, cheaper gas prices, and appreciating wealth in the housing market. The end result is consumers with more money to spend on things that make them happy, such as dining and travel. And I can see an investment opportunity opening up in some restaurant stocks. When people are confident with their financial situation, they tend to spend more freely. Take a look at the chart of the Dow Jones US Restaurants & Bars Index, which has been edging higher and appears to be breaking out following a sideways channel. I feel there’s a continued investment opportunity in the sector, as lo ... Read More
China is dealing with an aging population. By 2030, the number of Chinese citizens 65 years or older is estimated to come in at a whopping 240 million, or about 18% of the current population. (Source: “China Population 2014,” World Population Review web site, October 19, 2014.) The rapid growth in this elderly demographic will clearly present issues for China’s health administrators and will, in the process, place a heavy burden on the country’s healthcare system. Some estimate spending on the country’s healthcare sector will accelerate from about $357 billion in 2011 to a whopping $1.0 trillion by ... Read More
It’s headline news: America is getting bigger around the waistline and that means that there’s a greater potential for higher healthcare issues down the road—which isn’t a good sign for a healthcare system that is already struggling. (Maybe the government should offer monetary incentives, such as tax credits, for those who join gyms or pursue other healthy alternatives.) Even though America is struggling with obesity, Americans realize the issues and consequencesthat go along with obesity and an unhealthy lifestyle. And this is now happening on a worldwide scale. China, for instance, is beginning to see obesity issues surface and rates climb; more alarming is the fact that o ... Read More
The much-anticipated debut of Chinese Internet powerhouse Alibaba Group Holding Limited (NYSE/BABA) has arrived and gone. Even if you missed out on getting your hands on China-based Alibaba at its pre-initial public offering (IPO) price, you could still have purchased the stock at $82.81 on October 15 and made more than a 30% gain in two weeks. The stock traded at a record on Wednesday, as excitement continues to hold and gain traction in the U.S. stock market. With the gain and a market cap in excess of $265 billion, Alibaba is now bigger than Facebook, Inc. (NASDAQ/FB), but about $100 billion ... Read More
One of the key tenets to success in the stock market, as I have learned from more than 20 years of trading, is the need to make sure you have a system in place to actively monitor your outstanding positions. Any major changes to the underlying fundamentals are critical. Unless you invest in mutual funds or are happy with a buy-and-hold strategy, ignoring your positions is not prudent and will likely result in damage to your portfolio—and maybe even your quality of life. In early October, when the Russell 2000 and the NASDAQ were down 14% and 100%, respectively, the thing to do was not to rush to the exits and liquidate everything. Making rash ... 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