In this tenth installment of the Long vs Short series I am once again going to take look at the chart comparisons for a stock from the Share Investor Portfolio and compare the 10 year return (above chart) to the turmoil of the last year with a 1 year return chart (large chart at bottom of post).
In this series I want to show the merits of investing, using charts, for the long-term vs short term gains or losses. I will use the longest available data to me for the long-term view (10 years )and will make a comparison against the NZX50.
In this installment of Long vs Short I will look at Fletcher Building Ltd [FBU.NZ].
I currently hold 1114 Fletcher Building shares in the Share Investor Portfolio, the bulk of which I have owned since November 2006. (see small chart below for detail)
The company has been a very good performer with great returns and is still going OK under current tough economic conditions.
Symbol
|
Price
|
Value
|
Earned
|
$7.290
|
$8087.64
|
$-615.69
| |
In my 2.5 years of owning this share my return has been a loss of just over 7 %. This includes dividends and tax credits.(see small chart above)
If I had bought this share just a year ago (see large chart at bottom) my return would have been a 34% loss, with a loss of 50% as recent as March 2009.
Now for the real point of this comparison, lets look at the return for Fletcher Building shareholders who have held the stock for 10 years. (see large chart above)
From a high of a 450% return at the end of 2007, the 10 year return as of writing is still around 200%. All those dividends plus tax credits and time has given the long termers another win.
This series has yet to return a positive for short term investors.
Disc I own a small FBU holding in the Share Investor Portfolio
Fletcher Building @ Share Investor
Fletcher Building's Commercial arm keeps their head above the tunnel
Sweetheart deal for Fletcher Building's Friends
Fletcher House built on hard times
Fletcher Building down tools in the short term
Why did you buy that stock? [Fletcher Building Ltd]
A solid foundation for the future
Fletcher Building raises profit through canny management
Fletcher's got game
Discuss this Stock @ Share Investor Forum
Long vs Short Series
Ryman Healthcare Ltd
Michael Hill International
Auckland International Airport
Freightways Ltd
Pumpkin Patch Ltd
Fisher & Paykel Healthcare
Mainfreight Ltd
The Warehouse Group
Sky City Entertainment
c Share Investor 2009
I do not get it. Is this your way of advocating a buy and hold strategy.
ReplyDeleteI am not convinced that this shows that long term investing versus short term investing is better.
You are not using the charts to determine you entry and exits at all, just picking an arbitrary 1 year period.
Just using a 25% trailing stop would have meant the short term momentum trend follower would have been able to ride that stock higher and exit with far better returns than the long term buy and hold.
I don't think the short termers like yourself will ever agree with long termers like me. The diff in our strategies is just a matter of time.
ReplyDeleteIf you have a look at the 10 Long VS Shorts I have done they all show better returns for the long term, with no exceptions.
Granted, the timing of entry is arbitrary and there could be gains made by getting in and out, but what I was trying to show was merely a long vs short perspective for the same long term and the same short term periods and I believe it proves my point very clearly.
I have made around 10% in less than a week by buying some shares last Wed but am I going to sell them?
No way, I would then become a trader and taxed on my returns and while I could easily make money this way, that is another strategy for another day.
Cheers
Why would you sell your shares if the shares you own are less than their intrinsic value? Presumably you bought the shares because they were below your calculated value for the shares.
ReplyDeleteOnce the trend had changed and a fundamental change had occurred in the industry, your recalculated value for the company would have been below the current price and resulted in a sell.
The question is at what price would you sell them, if you did not consider the prices at the peak of the bull market to be overvalued compared to your measured intrinsic value of the company?
The question about when to sell is a great one and the answer to that for me would be never, unless there is good reason to.
ReplyDeleteOf course if somebody offered me a ridiculous price in the future, and history has shown that people do, then I would have to sell.