Sunday, March 29, 2009

A Hickey in Bernard's Advice

I usually rate Bernard Hickey very highly, he basically tells it like it is and is right more often than wrong.

He knows interest rates, property and all investment categories generally very well.

His latest column on the death of stocks as a long term investment bugs me a little though because I think he has got things horribly wrong.

There has been much talk about the end of equities or the end of buy and hold but my experience in the stockmarket would prove otherwise.

After more than 10 years of market experience(not long at all and still learning) and my stock portfolio which is 7 years at its oldest and 2 years at its youngest and given one of the worst stockmarket routs since the Great Depression my portfolio is still in the green.

Granted things could get worse and they probably will but the thing that Bernard et al are forgetting is that investing in good companies and time will take care of your stock investment for the positive.

Generally, the longer you have held the stocks in your portfolio the better for your wallet.

In my series of Long VS Short columns I have proven after looking at six different stocks in my portfolio that the longer you have held the better you have done.

Bernard either has a different view to me what long term is (10 years plus is my interpretation)or he has neglected to take into account all aspects of long term investing; tax credits, compounding dividends when combined with length of time.

Any asset class (bar residential housing for living in) is better for your pocket in the long-term, especially if you have chosen well and at the right price at the get go.

You simply cannot beat compounding investment over time and while getting out of that investment is usually inevitable the timing of that must be made before you make that investment.

Stick to your initial investment intention(if it is a short term investment, stick to it as well) and only alter it if you know you have made a mistake or see circumstances drastically change.

Bernard Hickey may be right now but I can almost guarantee that years from now he wont.

Be patient!

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The Warren Buffett Portfolio: Mastering the Power of the Focus Investment Strategy
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