Does Long Term Investing Work?
Over the last few years the market has been up and down, but overall it seems to have done very little. So, does buy and hold still work? Does buying into a diversified group of stocks still benefit you in any way?
The answer is yes. Or at least there is no evidence to suggest that it doesn't. In fact all the evidence seems to still suggest that buying stock in a strong company and holding onto it for the long term is still a great way to invest, and here is why.
1. There Have Been Lots of Flat Times
We want our time to be unique, when something bad happens we want to believe that it is just because our time is the end of bull markets. But in reality there have been plenty of times in the past were stocks have trended sideways or gone up and down for many years on end.
Only the people who hung onto their stocks and didn't give up profited as the market continued its uptrend later on.
2. History Shows Us a Positive Sign
Over the long term the major indexes such as the Dow Jones and the S&P have gone up and they continue to go up. In fact, aside from buying at the top of the great depression if you would have invested into strong stocks and held them for 20 years during any point in the past it would have been profitable. History repeats itself more often than not.
3. Some Stocks Pay Dividends
If you do take a look at the long term charts of the major indexes you still do not see the whole story. Many stocks also pay out a consistent cash flow to their investors in the form of dividends. These can make stocks a better investment than CDs and Bonds even in flat markets.
The stock market has been a pretty profitable way to make money over the long term in the past. But who knows what will happen in the future. In the end you always take risks by investing into stocks, but those risks would have worked out in the past.
Article Source: FxTradingStock.com
About the Author
For more on the Dow Jones History and it's returns or for more information on how the stock market has done over the long term visit this Stock Market History page.
by: Shaun Rosenberg
Total views: 29
Word Count: 376
Date: Tue, 20 Jul 2010
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