Long term investment stocks are the key to successful and profitable investing.
Too often inexperienced investors will trade in and out of a stock based on certain news they might hear on any given day. Instead, the key to successful investing is to first map your financial goals, take the time to learn how to invest, and then pick the best stocks for long term investing and try not to pay attention to the day to day news and stock fluctuations.
But you need to pick the best long term stocks to invest in if you want to be successful. You can’t just pick any stock and hope that it is going to be successful.
Our goal in this article is to define a criterion to help you pick safe stocks to invest in long term and give you three examples to help you get started with your portfolio. You will want to be more diversified then just three stocks, but these three examples will help you get started.
To be successful with buying long term investment stocks you need to first put together a strategy that will help you make wise investment decisions. Lacking such a strategy you will be whipped sawed back and forth buying and selling stocks based on what you hear or read on the news each day.
At Wealthplicity we have developed a criterion for buying long term investment stocks and have used it successfully to pick quite a few winners over the years. First, we will discuss two general rules about investing in stocks. Then we will discuss five stock specific rules for picking long term investment stocks:
Now here is the five step filter we put each stock through before deciding to buy it as a long term investment stock:
I am not sure how the market price of these stocks below will do tomorrow or next month, but I believe over the long run these long term investment stocks will perform quite well vs. the market averages. Too much money is lost by people trading in and out of their stock positions. If we make the stock selections right based on the criteria outlined above, we are almost certain to make money over the long run. So, ignore the short term stock price movements and don’t sell unless something fundamentally changes about the business.
Now that we’ve described the criterion used for picking long term investment stocks, let’s use the criterion to pick three example businesses for your possible investment.
There are so many ways to win with Microsoft that the future is quite bright.
So many wonderful brands from Windows, LinkedIn, Xbox and it biggest recent growth driver, Azure. So many of us use these products every day, and sometimes in the case of Azure, their infrastructure as a service segment, we may be using Microsoft’s products without even knowing it.
They are led by CEO Satya Nadella since 2014 and it is amazing how they continue to grow at impressive rates despite their large size, having grown revenue 18% in their most recent fiscal period. This is amazing revenue growth for a company with a market capitalization of approximately $2.2 trillion. And as wonderful as the recent past has been for Microsoft, we can see the business continuing to grow nicely into the future. Buy a few shares, and let their value compound in price as the business continues to fire on all cylinders.
Oh and did we mention they Microsoft has net cash (cash less long term debt) of approximately $130 billion on the balance sheet which will allow them maximum flexibility to make investments and/or return money to shareholders in the form of higher dividends or share repurchases.
Microsoft is a great stock for all investors from beginners to advanced. While it will not be the top percentage gainer in your portfolio, it will do quite well giving your portfolio a solid foundation.
If you are looking for a stock that is a bit more aggressive then Microsoft, consider Pinterest.
Pinterest describes itself as an image sharing social media site that allows users to connect links and create visual pin boards based on their interests. No doubt social media is a mega trend that is here to stay, and Pinterest has carved out a massive following by aligning its users based on their interests.
Pinterest is a very successful company with a market capitalization of more than $38 billion. But as successful as Pinterest has been, they are just getting started monetizing their 450 million monthly users via advertising on the site, etc. In fact, Pinterest has averaged revenue growth of approximately 50% a year over the last three years.
Pinterest has been very successfully run by chief executive officer and co-founder Ben Silbermann since 2011. And as successful as the site has been to attract 450 million monthly users in just a decade, they are just getting started in so many ways
Silbermann owns about 9% of Pinterest, so his interests are very well aligned with shareholders to bring out value in Pinterest stock price over time.
Although you never know how an individual business will perform over time, Pinterest has a lot of good things going for it that will give it an edge to outperform the market indices and make money for its shareholders over the long run.
The most aggressive stock of the three included in this article is Upstart Holdings.
Upstart Holding provides a cloud based artificial intelligence platform to improve access to credit while reducing risk and cost of lending to its bank partners.
In short, Upstart has artificial intelligence algorithms that look beyond the standard FICO scores of individuals to grant them better access to credit ( i.e. lower rates), while reducing costs to its bank partners via lower default rates. It is the ultimate win-win scenario.
Upstart is run by chief executive officer and co-founder Dave Girouard, who has an impressive resume having worked previously for Alphabet/Google, Apple, Boz Allen and Accenture. The lind of resume you love to see for the person in charge of running your business on a day to day basis.
Upstart is a smaller company vs. Microsoft and Pinterest with a market capitalization of approximately $12 billion. But it is the fastest growing with its revenue up 90% in the latest quarter.
Given the smaller size of the company, the stock price of Upstart will likely be the most volatile of the three stocks in this article. But we see this business as a wealth builder over the long run.
When it comes to investing, think about long term investment stocks that you plan to own for many years. Don’t plan to try to time the market by trading in and out of positions. The highest wealth is created by buying high quality companies and holding them for long period of time.
No crazy option strategies, no leverage, and no day trading for all but the most experienced investors.
Think of your self as the part owner of a business (which you are) for which you plan to be invest for a minimum of three to five years.
Use the examples of Microsoft, Pinterest and Upstart to get you started on your research as you start to build your portfolio of long term investment stocks.