Here is an example of long term investing. About one year ago in another forum, I was criticized by a "master" for mentioning PG as an interesting stock in the disinflation environment that I foresaw as coming. I had remembered that in the 1980s, stocks like PG, MCD, KO, etc really performed very well in such a disinflation, moderate growth environment.
Of course a crucial aspect of long term investing is that one holds the stock long enough to something good to happen and/or one's views to become more widely recognized and accepted - if one is correct, but just early.
So PG one year ago was around 65. Today it's 74. So that's a 14% gain plus a 2% dividend, thus one obtained 16% under favorable tax treatment. A short term trader would need to be correct several times and realize a bit over 20% to have the same aftertax return.
Well, Mrs. B did a bit better in her Sky Fund, buying PG in March at lower prices, plus PEP and MCD. Those companies have good products, good margins, and good overseas exposure. In a disinflation environment with a declining dollar, they can outperform. And they are good long term holds for a "retired" couple having steady dividend growth.
We'll probably hold these stocks for a long time now, having gotten good entries.
To build a good long term investment portfolio really takes at least a year. Good entries don't occur every day and one needs to select stocks that will perform well in the anticipated environment.
There are good entries now under the economic trajectory that I believe is unfolding: a mid-cycle slowdown amid disinflation and solid growth in emerging market nations.
Internet related tech, energy, miners, big cap financials, select transports are my favored groups. I'd like to find one or two hot small cap growth stocks, too.
PS: A UN global warming summit in Bali ... gee .. I wonder how much fuel was burned getting all those coneheads to that far away place ? And I wonder who is paying ?
PPS: Ben Stein says GS report on credit crunch was designed to create fear so they could make money on shorts. Golly, he must read this blog, too.
P^3S: IBD says the market is in a confirmed rally. I don't see a confirm day in days 4-7; maybe they are invoking the exception that if days 2-4 are very strong overall, that can be confirmation. Perplexing ???
P^4S: There are some inarguably "smart money" groups buying distressed assets, viz. Buffet (TXU bonds) and MS (Lennar land), among others. It's starting to smell like the bottom is in or close thereto.