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When can you take a profit if you bought shares at the peak?
By Dr Wealth  •  July 27, 2009
[caption id="attachment_3047" align="alignright" width="150" caption="Photo by Tony the Misfit"]Photo by Tony the Misfit[/caption] Stock market goes up and down unpredictably. I believe some investors have experienced buying at the wrong time - at the peak or near peak of the stock market, and to their horror witnessing the stock price plunge. Many of these investors will find it hard to swallow losses and will want to switch to ’safer’ instruments like bonds. A few investors will hold on but not sure how long will there see their account turn green again. The good news is if you hold long enough, stockholders will eventually be better off than bondholders. The question is how long? I found a rather accurate answer from a financial analyst and investment manager, Edgar Lawrence Smith, who published a book in 1925, titled “Common Stocks as Long-Term Investments“. In the book, he mentioned that one will take 6 to 15 years of holding a stock in order to see a profit. Jeremy Siegel verified the figures in his book, “Stocks for the Long Run“: “Smith’s conclusion was right not only historically but also prospectively. It took just 15 years to recover the money invested at the 1929 peak, following a crash far worse than Smith had ever examined. Read more...
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By Dr Wealth
Dr Wealth provides trusted financial education to individuals. We teach researched and actionable investment methods so that our graduates are successful in their investment journey and achieve market-beating returns.
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