Which stocks would you hold for 30 years?
- Thread starter eagle488
- Start date
This is a consideration too in this plan. Its not only for myself, but for future generations. Many people think about the here and now. They use their profits and spend it on the newest things.
I get a kick out certain people who sold their houses for a windfall profit. What did they do with the cash? Did they use it to buy some stocks, bonds or mutual funds? Was it even put away into a money market account? Nope. It was spent.
I would like my future generations to pick up where I left off. . .
I get a kick out certain people who sold their houses for a windfall profit. What did they do with the cash? Did they use it to buy some stocks, bonds or mutual funds? Was it even put away into a money market account? Nope. It was spent.
I would like my future generations to pick up where I left off. . .
Thirty years ago, amongst the top 10 largest US corporations, there were 3 automobile manufacturers. GM, for example, had a 5.8% continuous growth rate in share price + $77 in dividends over the next 30 years (before adjustment for inflation). However, the starting point was also in one of the worst times (1975 marked a market low) for the stock market so it was a much simpler then to select issues for buy-and-hold.
We have enjoyed over the last 25 years one of the great booms in the stock market and gone from a period of extreme pessimism (the S&P 500 had been flat for the previous 10+ years in 1976) to a period of fairly high optimism regarding stock performance. The likelihood of repeating the last 30 years' overall performance is low as stocks are much more fully valued now. Equally low is the likelihood of accurately predicting the winners for the next 30 years. Thus I would be as broad-based as possible,and would include a mixture of overseas markets, where I think more and more capital will be allocated (and you want to diversify currencies), and real estate.
We have enjoyed over the last 25 years one of the great booms in the stock market and gone from a period of extreme pessimism (the S&P 500 had been flat for the previous 10+ years in 1976) to a period of fairly high optimism regarding stock performance. The likelihood of repeating the last 30 years' overall performance is low as stocks are much more fully valued now. Equally low is the likelihood of accurately predicting the winners for the next 30 years. Thus I would be as broad-based as possible,and would include a mixture of overseas markets, where I think more and more capital will be allocated (and you want to diversify currencies), and real estate.
Gold spot peaked around 1980 near $750 per ounce and in the next 26 years has never reached that peak again. Since 1980 it had given up nearly 2/3 of its value at its low point and only recently has traded above $450.
Gold's investment use in the US was primarily as a hedge against inflation. However since interest rates were freed up short-term paper is a much better inflation hedge -- and there is no carrying cost.
I probably wouldn't but if I was forced to choose I would go with a business I would personally own outright if I could.
Toronto Dominion Bank
Citibank
Earthbound Farms (if it was public)
more conservative plays...
QQQQ or SPY
Personally I can't imagine a world existing without big banks or fruits and vegetables
Another great business model I can't see ever going away is the credit card companies, MasterCard(MA) or VISA(soon to come public)
Toronto Dominion Bank
Citibank
Earthbound Farms (if it was public)
more conservative plays...
QQQQ or SPY
Personally I can't imagine a world existing without big banks or fruits and vegetables
Another great business model I can't see ever going away is the credit card companies, MasterCard(MA) or VISA(soon to come public)
"We have enjoyed over the last 25 years one of the great booms in the stock market and gone from a period of extreme pessimism (the S&P 500 had been flat for the previous 10+ years in 1976) to a period of fairly high optimism regarding stock performance. The likelihood of repeating the last 30 years' overall performance is low as stocks are much more fully valued now."
Allow me to change your mind on this avenue of thought.
Look at the following chart:
http://finance.yahoo.com/charts#chart1:symbol=^gspc;range=my;indicator=volume;charttype=line;crosshair=on;logscale=on;source=
Look at the little blip in 1987. If you were trading in 1987 on that fateful day in October, you would have thought the great depression was upon us. I remember that day very well. I was sitting in front of a television with my family and my grandmother, who had lived through part of the depression, kept saying out loud "oh my god".
I read articles about guys who got completely wiped out. Those were on margin especially. There was this one notable story of a trader who was saying that they knew it was coming. The markets were tanking in Europe and Asia and then that morning came. He had kids and a wife and had to go back home to them to explain that he was cleaned out that day. Its one thing to take a loss, but its another experience altogether to explain it to people that you have to live with....
However, when we look at the above chart its just a little blip. A small footnote in history, nothing more. Its never talked about that much as everyone forgot what happened.
Now lets look forward on the chart to 1999-2002 period. That wasnt too long ago. I think the memories of those periods are still fresh in everyones mind. That period of time was HORRIBLE. However, when we look at the chart its just a small speed bump.
Now lets look at the Dow Jones Industrial Average...
http://finance.yahoo.com/charts#chart1:symbol=^dji;range=my;indicator=volume;charttype=line;crosshair=on;logscale=on;source=
Lets look at the Great Crash. In the 1929 timeframe, there appears to be a medium sized speed bump. During World War II, another good meandering. The 1970s, a period of great unemployment, inflation, etc., yet another meandering. The 1970s was a time in which you were guaranteed of getting mugged in NYC if you lived there. NYC was about to declare bankruptcy at one point. The cover of Time magazine declared one day that this was the end to the stock market. These were horrible times financially.
Over a great amount of time, these inefficiencies sorted themselves out. World Wars, market crashes, Jimmy Carter, etc. None of these elements stopped the great market.
Growing up, dont you wish your ancestors had invested in companies like IBM or Coca Cola and held shares of the stock through good or bad? If they had done so, then maybe growing up might have been much better for you. Maybe you would have started out in life a lot wealthier and would have been able to afford more luxuries.
Companies like General Motors and Delta might have seemed like good investments once upon a time, but they are more like nightmares today. Maybe Enron might have seemed like a good long term holder back in the 90s. Afterall, it did deal in energy which is something that everyone needs. It was a large company with international holdings and the market cap was sizable.
So it is important to invest in a large basket of well established companies. My plan is to purchase $500 in stock from at least 100 different companies and then lock it away. 30 years from now, the stock will be revisited. If I am not around anymore for whatever reason, then it will go to my ancestors. The companies I am choosing are ones that have existed for multiple decades and have a history of increasing their dividends throughout time.
I would not let companies like GM, Ford or the airlines stop you from pursuing a plan like this. There are always exceptions to every rule. Time will eventually sort out the inefficencies that seem to exist today.
If somehow the plan doesnt work, then you will just have another story to tell about how you lost money on another trade.
(Sorry, the charts are not loading right. The first chart is an all data chart for the S&P500, second is an all data chart for the DJIA)
Allow me to change your mind on this avenue of thought.
Look at the following chart:
http://finance.yahoo.com/charts#chart1:symbol=^gspc;range=my;indicator=volume;charttype=line;crosshair=on;logscale=on;source=
Look at the little blip in 1987. If you were trading in 1987 on that fateful day in October, you would have thought the great depression was upon us. I remember that day very well. I was sitting in front of a television with my family and my grandmother, who had lived through part of the depression, kept saying out loud "oh my god".
I read articles about guys who got completely wiped out. Those were on margin especially. There was this one notable story of a trader who was saying that they knew it was coming. The markets were tanking in Europe and Asia and then that morning came. He had kids and a wife and had to go back home to them to explain that he was cleaned out that day. Its one thing to take a loss, but its another experience altogether to explain it to people that you have to live with....
However, when we look at the above chart its just a little blip. A small footnote in history, nothing more. Its never talked about that much as everyone forgot what happened.
Now lets look forward on the chart to 1999-2002 period. That wasnt too long ago. I think the memories of those periods are still fresh in everyones mind. That period of time was HORRIBLE. However, when we look at the chart its just a small speed bump.
Now lets look at the Dow Jones Industrial Average...
http://finance.yahoo.com/charts#chart1:symbol=^dji;range=my;indicator=volume;charttype=line;crosshair=on;logscale=on;source=
Lets look at the Great Crash. In the 1929 timeframe, there appears to be a medium sized speed bump. During World War II, another good meandering. The 1970s, a period of great unemployment, inflation, etc., yet another meandering. The 1970s was a time in which you were guaranteed of getting mugged in NYC if you lived there. NYC was about to declare bankruptcy at one point. The cover of Time magazine declared one day that this was the end to the stock market. These were horrible times financially.
Over a great amount of time, these inefficiencies sorted themselves out. World Wars, market crashes, Jimmy Carter, etc. None of these elements stopped the great market.
Growing up, dont you wish your ancestors had invested in companies like IBM or Coca Cola and held shares of the stock through good or bad? If they had done so, then maybe growing up might have been much better for you. Maybe you would have started out in life a lot wealthier and would have been able to afford more luxuries.
Companies like General Motors and Delta might have seemed like good investments once upon a time, but they are more like nightmares today. Maybe Enron might have seemed like a good long term holder back in the 90s. Afterall, it did deal in energy which is something that everyone needs. It was a large company with international holdings and the market cap was sizable.
So it is important to invest in a large basket of well established companies. My plan is to purchase $500 in stock from at least 100 different companies and then lock it away. 30 years from now, the stock will be revisited. If I am not around anymore for whatever reason, then it will go to my ancestors. The companies I am choosing are ones that have existed for multiple decades and have a history of increasing their dividends throughout time.
I would not let companies like GM, Ford or the airlines stop you from pursuing a plan like this. There are always exceptions to every rule. Time will eventually sort out the inefficencies that seem to exist today.
If somehow the plan doesnt work, then you will just have another story to tell about how you lost money on another trade.
(Sorry, the charts are not loading right. The first chart is an all data chart for the S&P500, second is an all data chart for the DJIA)