...maybe the part that I am controversial about is going against the grain of conventional wisdom that Buy and Hold is the way to go....who am I to say that Buffett is wrong, right?
...let me be clear, I never said Buy and Hold is wrong, I said assuming Buy and Hold will always be fine is false and many time proven wrong.
...and so you may say that that may be the case for specky stocks, not good blue chip stocks.
...this below is proof that even well regarded and established US major companies can deliver negative returns after a 5 year hold.
...Nike is -26% down from 5 years ago!
...Accenture -5% down from 5 years ago
...Disney -43% down from 5 years ago!
...Airbnb -37% down from 5 years ago!
...Pfizer -19% down from 5 years ago!
...big long-term declines despite S&P500 almost breaking 7,000!
...the worse part is that suffering holders continue to believe the company they invested 5 years ago, many love them because they love the brand or franchise or not prepared to take a loss or wanting to believe that the longer they hold, there is a chance for eventual recovery.
...now here's the bad news. These stocks fall for a reason, and if the equity market is doing gangbusters at all time highs, yet they languish at the pits, what is to say that they won't be hit even harder when equities correction or crash arrives?
...there are many reasons explaining their declines
-it could be due to a generational shift in consumer preferences - you won't have the Gen Zs buying Revlon or Max Factor or Estee Lauder, nor Boss - the same could be true for Disney (with Netflix being more cool for them) and Nike
-it could be due to a major product that accounted for its higher market cap in the past becoming lacklustre in sales - the case with Pfizer in post-Covid environment
-it could due to an overvalued IPO valuation - the case with Airbnb
- it could be due to threat of losing relevance going forwards - the prospect Accenture faces as AI poses a cloud over consulting future
...when you ride these stocks down, you won't likely contemplate these reasons, if you had you would have sold them.
...conventional wisdom says hold your horses never sell at a loss- but the proponents of such wisdom the fund managers do sell them as they see a shift in business prospects.
...people generally do not calibrate the stock's market cap valuation to the prospects of the company at hand. A stock may have risen 50-100% on strong expectations of an outcome, but when the outcome does not provide as positive as expected, the stock can fall either sharply or over time. People are perplexed why their stocks fell when 'nothing changed' but conveniently forgot the 50% sharp rise it enjoyed months ago on the back of expectations of a positive news of some kind, which now turns out to be less certain or not as positive.
