Who Says You Can't Make Money in Stocks over Long Periods of Time?

Who says you can't make money in the stock market over long periods of time? You could have made substantial amounts of money by just owning only one share of stock, assuming you have the right stock. For example, you could have paid $35 for one share of Hewlett Packard (HPQ) back in 1962. Including splits and dividends, that one share would be worth $11,965. Another example is IBM (IBM), albeit a high priced stock back then at $572 per share. But if you had held on, that investment would be $25,635.

These enormous gains could have been achieved even over shorter periods of time, You could have paid $175.50 for a share of Johnson & Johnson (JNJ) at the beginning of January of 1970 and now have $18,161. Procter & Gamble Co. (PG) could have been had for $110 per share at that time, growing to $11.035. Then you could have bought Chevron Corp. (CVX) for $52.25 for one share and now have $14,079.

The moral to this story is 'Look for a few great companies and buy a couple shares of each one as gifts for your children and grandchildren.' Remember, the holiday season is coming up.

By the way, all the above stocks are Dow Jones Industrial Average stocks. You can find a free Dow Jones Industrial Average stock analyzer at WallStreetNewsNetwork.com.

Comments

[Roger Knights:]

"You could have made substantial amounts of money by just owning only one share of stock, assuming you have the right stock."

And you could have made substantial amounts at the track, assuming you bet the right horse.

You could have bought a one-ounce gold coin at retail in 1970 for ~$50 and watched it grow 20-fold, to ~$1000. That coin will (I believe) be a better buy for the next 40 years than any stock or stock average I can think of. And kids will get more of a kick out of it.

Or maybe split the stock/gold allocation 50/50, giving both. (There are fractional-ounce gold coins.)

Oct 28 04:18 AM

[logicalthought:]

You also could have bought General Motors, Xerox or Kodak at the same time you were buying your HPQ and IBM in 1962 and your JNJ, PG or CVX in 1970. Hey, why not? They were absolutely dominant, world class, multinational companies, right?

The point is that even if you're a very long-term investor, you need to look at every stock you own on a regular basis and ask yourself: "In light of everything I know about this company and where it fits into today's world, would I buy this stock TODAY?" If the answer is "no" for any reason other that it's already a full-sized position for you, you should immediately SELL and find something better.

Oct 28 06:12 AM

[poortorich:]

Long term, I would never buy an IBM, GM , Xerox, Kodak , HPQ, GOOG etc
However, i have no problem holding a portfolio of only KO, JNJ, PG for the long term as long as my buy price is right. Yes, I would still sleep very well at night.

Oct 28 12:52 PM

[RLLH:]

You are quite right. Since I worked for IBM back then I bought a few shares (very few) each year. Now they pay me $17,000 a year in dividends not to mention being worth a great deal of money.

Oct 28 02:59 PM

[Hester:]

It only takes one or two stocks to make a portfolio. Hold for the long term as long as you keep believing in the company (backed up by continous research). Don't get scared out of your stocks for whatever reason. It can only take one stock to make your portflolio a success. If you would of bought 1 share of 10 different stocks in 1962 that were trading for around $35, you would of spent about $350. If just one of those was HP and the other nine eventually went bankrupt, you still would be up $11,625. Even though your success rate is just 10%, your small portfolio could still be considered a great success.

Oct 29 09:50 AM

[SwSwS:]

If you bought two lottery tickets and only one of them was a winner, it would still be a good investment.

Nov 02 11:14 AM

[mbkelly75:]

If you stick to stocks that have a record of RAISING their dividends for a minimum of 5 years and re-invest the dividends as they come in - this kind of success over time is not difficult - it simply takes time. The author (and several commenters) have it quite right. This is not rocket science OR a lottery - just the miracle of the only thing more wonderful for your financial health than compounding interest - compounding dividends. 40% of the stock markets total return over more than 137 years of history have come from dividends so if dull dividend-paying stocks bore you - you need to wake up and smell the cash. Why leave that much money on the table? There is NO reason to pass up that much return.
No gimmicks, no paying someone else to tell you what to buy or any other type of "get rich now" schemes. The numbers will show you that it is easier than you think:
If you had invested as little as $50/month ($600/year) in dividend-paying stocks between the ages of 8 to 13, and re-invested the dividends, you will have built up over $1,000,000 dollars by the time you have reached 65 years old. No Social Security needed, no pension plan from working, nothing more than those few years of $50/month and no better return yearly than the average return of 11% annually that the stock market has given historically. It is that easy, and has been done many, many times by different people over the years. It does not even take large yields. The "Golden Ratio" of stock dividends (the dividend yield that gives the best return and still allows the company to improve itself and grow) is between 3.1% and 3.8% for a normal stock - not a REIT or MLP - just a normal dividend-paying stock. $600 a year for 5 years = $2000 with never another dime put into stocks after that. Now no one says that you can not start younger or invest more or keep on investing and reach that $1 million level sooner or focus on stocks that pay that rising dividend and get better than average returns.
Peter Lynch put it this way:
"If you invest $1000 in a stock, all you can lose is $1000, but you stand to gain $10,000 or even $50,000 over time if you are patient. You need to find only a few good stocks to make a lifetime of investing worth while."
"Owning stocks is like having children - don't get involved with more than you can handle. The part-time stockpicker probably has time to follow 8-12 stocks and to buy and sell as conditions warrant. There don't have to be more than 5 stocks in the portfolio at any one time."
I would not pick just one stock - he makes a good point about five stocks, but choosing five stocks is not difficult. Keep the stock unless it drops the dividend and just hang on through all the ups and downs. The price does not matter as the dividend being re-invested at a lower price simply buys more stock - just give the stock dividend the time needed to work the miracle. Does this work? I can tell you from my own experience over more than 50 years that it does. All you really have to do is take action and get started.

Nov 05 09:47 AM