--Fred Schwed, Where Are The Customers' Yachts?Quote:
"[M]y tendency has been to buy stocks, all a-tremble as I do so. Then when they show a profit I sell them, exultantly. (But never within six months, of course. I'm no anarchist.) It seems to me at these moments that I have achieved life's loveliest guerdon making some money without doing any work. Then a long time later it turns out that I should have just bought them, and thereafter I should have just sat on them like a fat, stupid peasant. A peasant, however, who is rich beyond his limited dreams of avarice."
I was reminded of Schwed's quote when I read a blog post about a woman who bought 20 (or 40) shares of $BA Boeing stock back in 1965 for $250. She then did nothing with those shares, certainly not selling them, and just let the dividends reinvest every quarter. 53 years later, she has 400 shares*, and her $250 investment is worth $134,800. The dividends alone on those 400 shares pay $2700 a year, or more than ten times her initial investment of $250.
You also have Ronald Read, the Vermont janitor who bought stock in over 90 companies, and died with a portfolio worth $8 million. Read carefully researched the companies he bought, and if he didn't like how they were performing after his purchase, he'd stop buying that stock, but never sell it. Some companies (Lehman Brothers) went bankrupt, but some (like $PCG Pacific Gas & Electric) continued to split and grow in value even though he never invested past his original purchase, and used dividends to buy other stocks. Read bought for the long haul, and literally never sold his holdings.
I think most of the traditional buy-and-hold investing approach advises to buy and hold for a 20-30 year long-term period, for the logical reason that most people are investing to provide a financially secure retirement, and most people work between 20-40 years before they retire. The buy-and-hold forever approach isn't looking at holding for a 30 year period to sell to fund for retirement, but to buy and hold for the rest of your life, using the price growth of the stock and dividends to help supplement your retirement income. Holding it forever makes your
stock purchases a legacy of wealth you can pass on to future generations, though, so it not only provides you with an income source through retirement, but also secures the financial future of your family after you're gone (assuming they continue to hold onto the stocks and don't get greedy and sell them and blow the money, always a big risk).
I've been reading recently about the struggle of the middle to lower class to get ahead and acquire wealth in today's economic climate. If you take the buy-and-hold-forever approach, you not only begin the process of acquiring wealth for yourself, but give yourself the opportunity to transfer that wealth upon your death, giving your kids and grandkids a big financial leg up.
If you believe that investing is the process of buying stock in companies that you love and would be proud to own, a timeline of forever on your stock purchases is actually the logical approach. If it is a company you love to own, there is no reason to ever sell it.
* Boeing stock has split 8 times since 1965, so a purchase of 20 shares would have become 1215 shares worth $424,873.35 as of today, and yielding $8327.52 in dividend payments.
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"Now you're suggesting uncleanliness during a viral outbreak? What other great ideas you got Typhoid Mary[?]"
jamey, 3/13/20
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"They log into each other's accounts and post. They probably are two different people but that doesn't matter much when you log into other peoples accounts."
"Now you're suggesting uncleanliness during a viral outbreak? What other great ideas you got Typhoid Mary[?]"
jamey, 3/13/20
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"They log into each other's accounts and post. They probably are two different people but that doesn't matter much when you log into other peoples accounts."