Patience. Everyone knows what it is and certainly everyone has heard of the good old “Patience is a virtue” proverb. But – what does it mean in the context of investing? In his book The Intelligent Investor, Benjamin Graham advocates value investment – which in essence means that you should buy stock and hold it until it appreciates. Of course, since nobody can predict the market, it means that you should hold it for as long as it takes until the stock appreciates to a level of comfort at which you are willing to sell the stock and Mr. Market is in a position to happily accept the buy.
Unfortunately these days, stock which is highly undervalued is very hard to find. Not only that, but because the stock market is so volatile these days (no matter what anyone on TV tells you) it would be in essence a 50/50 shot at picking something, holding it and 10 bagging it. Yes, I mean making 10x the original investment amount. Most angel investors could careless about putting their money down unless they see the potential as a 10 bagger – so, since owning stock is essentially the same thing as being part-owner of a company, why on earth would you be interested in buying a piece of a company if you can’t see a 10x gain potential on it? Because you should never ever expect a 10x return on investment on your money on the stock market unless you are into highly speculative companies – such a junior mining companies (which is more or less essentially playing the lottery). You should however be happy with 2x – 4x return on your money.
I believe a reasonable amount of time to wait for a stock to hold for is 1-3 years. There are two companies which I am currently keeping an eye on: Ford (Ticker Symbol: F) and FIS Global (Ticket Symbol: FIS). Over the next couple of days I will post 2 separate blogs indicating why I think that these 2 companies are good buy and hold for 1-3 years.
On a side note, I’m a closet investor. I don’t have any formal training and frankly speaking I am probably wrong, but I am just sharing my common sense approach – and if it works: great; if it doesn’t: it’s your money – so you chose whether you want to invest or not. In fact, if you are investing entirely on the basis of a few blogs than I’ll gladly take your money and go on vacation for a while – because it means you have no idea what you’re doing.
So take a look at those 2 companies before I post my tidbits about them and see what you think.