Long Term Investing, Is It Dead?
Does long term investing still work? Over the last few years there have been many ups and downs and this has lead some people to believe that long term investing is dead. So is it? Does investing into a diversified portfolio still work over the long term?
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
People seems to be pretty eager to say something like, “we have been trending sideways for 5 years, looks like buy and hold is dead” Which if you look at the history of the stock market there have been plenty of times when stocks have been trending sideways 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 is a Good Indicator
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. Dividend Stocks
If you do take a look at the long term chart of the major indexes you are still not seeing the whole story. They also paid out dividends. These dividends alone can make them better investments then other similar securities like bonds or CDs.
All and all the stock market has been a profitable place to invest money over the long term and the last few years haven’t changed that. There is no way to tell for sure if the stock market will be a profitable place to buy and hold in the future, but history looks good. And in the end that is all we can really say.
For more on the Dow Jones Historical Closing Statistics and it’s returns or for more information on how the stock market has done over the long term visit this Stock Market History Graph page.
