13-07-2023, 07:07 AM
Conceptually there are 2 ways to make money from your stock investment:
Given the Kodak and Nokias of the world, I am not sure whether there are “forever” best stocks. Even Warren Buffett who professed to hold onto stocks forever also sells some of his stocks. Have you checked to see what the stocks you hold are still the best today?
I don’t have the ability to identify the “forever” stocks so I follow the latter approach. It works as long as you reinvest the money from the sale into other undervalued stocks. Conceptually your investment fund increase in size each time you sell and reinvest. That is how you grow your investment fund.
- Invest in the “forever” best stocks. These are stocks that will continue to be the best stocks in terms of growth and value creation for shareholders. If you find such stocks there is no need to sell them as their value and prices will continue to go up.
- Invest in undervalued stocks and when they become overvalued you sell them and reinvest the money into other undervalued stocks.
Given the Kodak and Nokias of the world, I am not sure whether there are “forever” best stocks. Even Warren Buffett who professed to hold onto stocks forever also sells some of his stocks. Have you checked to see what the stocks you hold are still the best today?
I don’t have the ability to identify the “forever” stocks so I follow the latter approach. It works as long as you reinvest the money from the sale into other undervalued stocks. Conceptually your investment fund increase in size each time you sell and reinvest. That is how you grow your investment fund.