Buy & Hold

[investar]

NO position is ALSO a position!

[winston]

No Stock is Safe

by Vishal Khandelwal

The bulls may want you to believe this but no stock is safe.

There are businesses that may remain good (earning return on capital greater than cost of capital) for some time, maybe a long time but you must not attach infinite values to them.

This is because high returns attract competition, generally causing return on capital to move towards the cost of capital.

While such companies may still earn excess returns, but the return trajectory is down.

Everything in this world, after all, is momentary. So, your best bet is to just stick with quality (even that is momentary, just for longer moments that allows time for compounding to work its magic).

The good thing about high-quality stocks is that you can pay up for them (never overpay), expensive looking prices, and still do well till the underlying businesses remain good.

With poor quality, most probably, you have no hope.

Source: Seeking Alpha

[winston]

Businesses will Die

by Vishal Khandelwal

Death will happen to all of us and to all of our businesses and that must not worry you.

It's the stagnation and gradual decline that diseases (bad management, capital misallocation, etc.) bring along, that you must watch out for (and try working backward now so as to avoid them, except for bad luck).

Source: Seeking Alpha

[winston]

Buy & Hold

If an investor was somehow unlucky enough to miss the 25% most profitable stocks and instead invested in the other 75% his/her total gain from 1983 to 2006 would have been 0%.

In other words, a minority of stocks are responsible for the majority of the market’s gains.

The Longboard study found that 18.5% of stocks lost at least 75% of their value.

In other words, nearly one in five stocks didn’t just return nothing, they were double-digit losers that destroyed investment capital.

Source: Investor Place