long_on_oil

Market Calls I Got Right - and Wrong - In 2008

Stocks are pieces of paper and that is all they are. If a company goes bankrupt have you ever known a common stock holder that made a cent. Have you ever purchased a stock that eventually went private at a price below what you paid for it? If you purchase Berkshire at $4000 a share and it is worth $5,000 a share based on intrinsic value, but Buffet wants to take it private at $3750, where do you stand now? The lawyers will make a fortune but you will give up your shares at $3750. Share prices are set by the big boys and the little guys like us just hope to buy and sell at the right points.
The only way you are guaranteed any kind of return on your investment at all is to buy stocks that pay dividends. The dividend places a bottom on the stock and you are protected to a point. Even dividends get cut so that does not guarantee you will make a gain.
Companies with a long history of paying and increasing dividends are by far the best way to go for the average buy and hold investor. At least you are getting a known return on your investment. Any good site has a screener program which helps you find these stocks.
These last 6 months have taught us that fundamentals have been thrown out the window. We all know stocks that are currently selling at 2 to 5 times next years earnings. With interest rates at 4% stocks have historically sold as high as 25X earnings (based on growth).
Where are all the investors that sold off as this market tanked and when are they going to get back in the market, that is the question.