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Tuesday, May 3, 2011

Does buy and hold forever still work?


Does buy and hold forever still work? 
buy and hold forever
Buy and hold for a long time period in investment particularly in shares of stock is one strategy by some investors. The strategy is simple, buy a shares of stock in low or reasonable prices and hold it for long time 20 years or more or forever because in the long run regardless of volatility of the market price you will earn a good rate of return. 

The most famous advocate of this strategy is Warren Buffet who once said "My favorite holding period is forever."

A lot of investing expert has criticized this strategy saying, it does not work because of some possibility that a company might do something wrong in the long run and in the end you will end up loosing your money. But does this strategy is work? For Warren Buffet this strategy is working, what if you are ordinary individual investor that's no nothing about stock market investing? Is this working also? Well it worked for, Grace Groner, a women who invested $180.00 in 1935 and hold the stock until her death last year 2010. For 75 years, her rate of return was astounding 15.13% compounded annually. 

Grace Groner was a simple woman. She is not an investment genius compared to Warren Buffet. She is live in a simple life has a small cottage from inheritance. She never owned a car, buying a clothes at rummage sales and was never married.

She work worked at Abbott Laboratories as secretary for 43 years. In 1935 she purchased 3 shares of stock of Abbot Laboratories worth $60.00 each. Her share split many times and she continued to re-invest the dividends.

Grace passed away last January 19, 2010 at the ripe old age of 101 years old. And you will be shocked how much her $180.00 worth now. Watch the video, and see for yourself.



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