Time Horizon


Three year data charts reveal that a stock trading at $200 could deliver returns in excess of 200% that easily beats an $8 stock's three year returns of just 3.75%. Tri-Valley corp.'s stock just simply didn't go anywhere and instead, that of Google Inc.'s $200 stock which looks so expensive did appreciate more than twice its value to over $600 within the same time frame. As a newbie looking at stocks to buy, you would've probably chose Tri-Valley Corp's $8.00 stock over Google Inc.'s pricey $200 stock, since you can acquire more shares with Tri-valley than with Google. But, what if I tell you that Tri-Valley Corp. is yet on a phase of actually getting a positive cash flow or is simply not making any money?, while Google's earnings are way over the roof and had a limited number of shares available for sale than most stocks trading at $20. We will cover that on later sections but for now we are just showing that a stock's potential to rise or fall in value isn't dependent on it's per share price alone.

Buying Tri-valley over Google would put your profits behind by as much as 208% on a three year time horizon. Although Tri-valley's stock did rose to $18 from $8 in early 2005, it lost steam and simply went back down to where you started at 2 years later. Looking at this, determining your time horizon for a trade would significantly increase your overall return whether trading for the long or short term. You may encounter a lot of stock advisors that recommends stocks somewhere down the road, all do have different trading strategies whether to hold a stock for 5 years or more, swing trading, and day trading. We wouldn't recommend any best time horizon on which to hold a stock before finally selling it, but the only thing that should count is no matter how long or quick you are to hold a stock, when company fundamentals turned sour, you wouldn't want to be holding on to that stock any longer. Just call it a day because you wouldn't run out of good ones anyway.

Previous | Next

Stocks | Forex | Options | Economics | Bonds | History | Language learning | Technology | Technical Analysis | Fundamental Analysis
Copyright © 2014 econtrader | Risk disclosure | Terms of Use