The answer: “A lot longer.”
While I didn’t know what a “long” meant in the days of Enron, and couldn’t tell you any better than a few minutes, I do know that the term “stocks” in this instance is a shorthand term for a broad group of stocks. I mean, when I say “long,” you probably mean “long-term,” and that’s what this post is about.
When we think of long-term, we think of “long-range,” which means something you can predict over many years. And by this definition, it seems fair to say that “stocks” mean long-range (i.e. the next 20-60 years), whereas “money” is short in the sense that they should be in a bank account for some minimum of time, for example just a few months. Of course, this means that this description would apply to money that you spend over many years, such as stocks. And while I suppose it might apply to some stocks that are held longer than the typical lifetime of most people, it isn’t the general rule.
For example, if you’re trying to invest in the stock market the next 20 years and the stock market is very cheap – the market prices are only a few cents an share and the market returns are a few points a year, which is still very good – then you might choose to buy some low-priced stocks at the beginning of your time horizon. This is a short-term strategy. But in the long term, even if the stock market is very expensive, you would probably want to be holding these low-priced and risky stocks for a couple of decades. The idea is to wait a long time, so that when the price of the stock drops to about the cost of purchasing it, the value you are getting for your investment increases substantially.
So, if a few months ago, most people would have said that an investor should buy a company that has a price under $10, you are saying that investor wouldn’t have been right to. Why? Because long-term investors like those who are making money with their investment probably don’t want to hold a company that has a price under $10 as long as things are going well. In other words, when the stocks are going well, you want your investment to be at least at the middle, mid and long-term end of the scale. So if you hold stocks at the middle and long-term end,
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