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How to be a Long-Term Stock Investor

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  • (0:30) - What It Takes To Be A Buy and Hold Investor
  • (6:45) - Breaking Down Jim Cramer's 17 years on Mad Money: Best Performing Stocks
  • (15:40) - Tracey’s Top Tips For Long Term Investors


Welcome to Episode #323 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

This week, Tracey is going solo to talk about tips on how to be a long-term investor.

Long-term investing should be easy, right? You simply buy some good quality companies and hold for years.

If only it was truly that simple.

Long-Term Investing: Easy?

Unfortunately, bear markets, recessions and other events intrude on the psychology of long-term investors with many ending up questioning the strategy. It takes a strong stomach to hold for years, or even decades.

And how do you pick the “best” companies? Two companies in the same industry may have very different trajectories on the stock market (see below with Booking and Expedia).

Is long-term investing all about luck?

What If You Had Owned These 5 Stocks Over the Last 17 Years?

1.       Microsoft (MSFT - Free Report)

Because of the big 5-year rally, many investors believe Microsoft is a “sure thing” that has always done well. Many kick themselves for not buying after the dot-com bust. But should they?

From March 2005 to March 2015, a 10-year time period, Microsoft shares were only up 61%. But shares were up 924% over the last 17 years, helped by a 251% gain over the last 5 years.

Microsoft shares have fallen 23% year-to-date but still trades with a forward P/E of 24.

Is this a buying opportunity in Microsoft for long-term investors?

2.       Apple (AAPL - Free Report)

Apple is, perhaps, THE stock that most investors “woulda, coulda” on. This is the one they regret not buying when the iPhone launched in 2007.

From March 2005 through this year, shares are up about 10,000%. But that was then and this is now.

Shares of Apple have only pulled back about 15% this year. Apple is not a cheap stock with a forward P/E of 24. And it’s dividend is a meager 0.6%.

Is Apple still a must-own stock for long-term investors?

3.       Sony (SONY - Free Report)

Sony, the Japanese technology and entertainment giant, has outperformed the S&P 500 over the last 5 years with shares up 108% versus 77.8% for the S&P.

But longer term, Sony has not been the success story for long-term investors like Microsoft and Apple. From 2005 to 2022, shares were up just 124% with the NASDAQ gaining 467% during that time.

After falling 32.7% this year, Sony now trades with a forward P/E of just 14.

Is it time to make a bet on Sony?

4.       Expedia (EXPE - Free Report)

What if you traveled a lot in 2005 and were an Expedia Group member so you decided to buy the stock.

From March 2005 to today, or 17 years, Expedia shares have gained just 103%. The last 5 years were pretty tough as well, with shares down 40% during that time compared to a 77.8% gain in the S&P 500.

Long-term investors in Expedia have had a rough time but shares are now trading at just 14.3x and earnings are expected to jump 300% this year.

Is it time to consider Expedia?

5.       Booking (BKNG - Free Report)

Back in 2005, Booking was known as Priceline. It was a big dot-com bubble winner but then went bust. If you had bought in March 2005, however, and held until today, it would have gained 7782%.

But much of that gain was front loaded over the last 17 years because over the last 5 years, shares are up just 20.3%. After falling 23.5% this year, Booking now trades at just 17x forward earnings.

With everyone traveling in 2022, should Booking be on your short list?

What Else Should You Know About Long-Term Stock Investing?

Tune into this week’s podcast to find out.

[In full disclosure, Tracey owns shares of MSFT and BKNG in her personal portfolio.]

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