# Best long term strategy for shares



## GundamZeta (11 November 2008)

can anyone tell me what is the best strategy for long term 3-5+ yrs on a shares?

e.g. i purchase a blue chip company A shares $ 20, if it keep dropping down to say $15... should i set myself a stop loss limit? and sell it before it incur any futher book value lost 

or regardless the share price fluctuation in short run drop below 10 or rise above 30....just stick to the long term goal and believe the share price will eventually picking up in long run...


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## fodder-oz (11 November 2008)

Well I am sure others will have their opinion as well but here is my 2 cents.

Long term for 3-5 years you have to be willing to see some ups and downs especially with the market the way it is atm.  

But once this mess is sorted out and you buy a bluechip like BHP for example which I am sure will be higher then its current price in 3-5 years you can just sit and collect dividends or reinvest them which would be good as well.

Of course if your worried the market has alot further to go down then you could set a stop loss of no more then say 5-10% considering who knows if we have reached the bottom yet only after the fact we will know when the bottom of the market has been seen. Especially with the major world economies going into recession who knows where the bottom of the market will be and for how long this bear market will go on for.

Remember its not timing the bottom of the market it's time in the market for long term stock to realise you value, There are very few people who can pick the bottom of the market until monthes after the fact.

But that being said we as humans tend to keep losing stocks for too long and not selling and when stocks are rising, not taking a reasonable profit and looking for the highest point  before we sell. It human nature to alot of people, unfortunately.


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## SM Junkie (11 November 2008)

There are so many different answers to your question depending on people's personal preferrence. I am suprised you would buy with a long term view and not expect it's share price to experience further volatility? Which leads me to ask why you chose that particular stock, was it just a good price or do you see the long term potential of the company?

You should have sought the answer to your question before you purchased the shares. That way if you are buying for the long term, then you would already have a plan in place regarding an exit strategy.

Personally I treat each one of the stocks in my portfolio differently.  I hold them for a variety of reasons and they each have their own plan.  So some have a stop loss, others don't; some I'll hold and review in say 5 years, others for 12 months; some are for exposure to a certain industry; some are blue chip and some are specs. But most importantly they were each purchased for a purpose and a goal in mind.


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## tech/a (11 November 2008)

Hold in the direction of the prevailing trend for as long as that trend is prevailing.
If A trend in longterm timeframe is not evident then find a vehical which is trending and can be traded in the direction of that trend.
Dont be blinded to other bourses or Commodities other than shares,.


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## Pairs Trader (11 November 2008)

Buy quality franchises on multi-year lows and sell them on multi-year highs.


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## Ageo (11 November 2008)

A simple strategy for long term holding is protective puts and covered calls (to offset losses).

I.E you buy a share @ $20 but you know your gonna receive 1 div payment every 6months (lets say). Well you could buy some put options to cover you for 6 months within a certain buffer with the dividend money you get. That way your covered for a complete bust but it doesnt cost you anything.

The other option is writing call options against your existing shares if the share prices is tanking and that will offset the losses you get.

Simply buying and praying to me is pretty much useless (and painful at times).


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## johenmo (15 November 2008)

tech/a said:


> Dont be blinded to other bourses or Commodities other than shares,.




Tech - whilst this is true, us learners probably (me anyway) feel more comfortable with Oz shares due to "familiarity" (bias??) and it's in our time zone.  I know we are reducing the universe in which to find "good picks" but I think you will know where I am coming from.

"Other commodities" - are you implying commodites (wheat, gold, oil etc) or including things like options, CFDs, etc as well?
Tks


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## Sean K (15 November 2008)

Balanced portfolio, rebalanced according to market conditions and trends of the day.

Cash would have balanced the portfolio out quite well over the past year, and continue to right now, although the tide may change shortly. 



Or, just go all in on black.....


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## tech/a (15 November 2008)

johenmo said:


> Tech - whilst this is true, us learners probably (me anyway) feel more comfortable with Oz shares due to "familiarity" (bias??) and it's in our time zone.  I know we are reducing the universe in which to find "good picks" but I think you will know where I am coming from.
> 
> "Other commodities" - are you implying commodites (wheat, gold, oil etc) or including things like options, CFDs, etc as well?
> Tks





Yes I understand.
If trading Fundamentally based and you take credence with individual Financials then yes I can see your dilema.
Being technically based this isnt an issue.

I am hardly trading at the moment as there is nothing long worth looking at.
However I can trade short in the US and soon again here.
Commodities could be anything (Indexes,Currencies,Gold)---but I think the ability to trade each direction is very important to survival---longterm.

*The real risk* with holding stock long term is that its real valuation at the end of the day may well end up to be 80% less than it was in the boom period!


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## johenmo (15 November 2008)

tech/a said:


> Yes I understand.
> If trading Fundamentally based and you take credence with individual Financials then yes I can see your dilema.
> 
> ---but I think the ability to trade each direction is very important to survival---longterm.




First point - I know exactly what you mean.  The fundamentals were "good" with one of my stocks but I didn't understand the business model then Like I do now.  Now I would run in the opposite direction as fast as I can.

Second point I can see why.  The past 5 months on ASF has shown me so much about having more than one strategy/system.

I seem to recall that someone on ASF stated they thought trading currencies was easier than stocks.  I always understood the opposite.  What do you think? And if it is the oppsite, why?


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## tech/a (15 November 2008)

johenmo said:


> First point - I know exactly what you mean.  The fundamentals were "good" with one of my stocks but I didn't understand the business model then Like I do now.  Now I would run in the opposite direction as fast as I can.
> 
> Second point I can see why.  The past 5 months on ASF has shown me so much about having more than one strategy/system.
> 
> I seem to recall that someone on ASF stated they thought trading currencies was easier than stocks.  I always understood the opposite.  What do you think? And if it is the oppsite, why?




Ive heard the same with Forex.
Liquidity would be one.
You can trade each direction another.
You can trade managable parcels.
You dont need massive margin.
E minis are another.
If your a technical trader they tend to trend better than most (Currencies).
I also believe that the tape is a better read---more conforming to technical analysis particularly VSA.
Youd be generally trading shorter timeframe.

The negative for me is the time zone. I like my sleep.
But it is something I have been meaning to look into for sometime.
I think it may have been Bentrod.


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## motorway (15 November 2008)

GundamZeta said:


> can anyone tell me what is the *best strategy for long term 3-5+ yrs on a shares?*
> e.g. i purchase a blue chip company A shares $ 20, if it keep dropping down to say $15... should i set myself a stop loss limit? and sell it before it incur any futher book value lost
> 
> or regardless the share price fluctuation in short run drop below 10 or rise above 30....just stick to the long term goal and believe the share price will eventually picking up in long run...





1. buy *strong stocks in strong sectors *in rising markets
2. short weak stocks in weak sectors in declining markets (or not )
3. *stay in cash in a trendless market*
4. buying the *best stock in the wrong sector in a       down market is suicide. *
5. use risk/money/trade management tools 
6. Determine broad market and individual sector trends in the context of the business cycle, stock market cycle and interest rate cycle. 

( see chart )




> can anyone tell me



 No , but here are some ideas

sourced from  Peter Navarro  a business professor at the University of California-Irvine 
Author of a number of Books
eg 







> When the Market Moves, Will You Be Ready?







chart---->



> The rhythmic rise and fall of equity sectors throughout the business cycle has told economist, analysts and investors for decades the positions of the economic and stock market cycles.
> 
> Certain equity sectors typically advance at different phases of the cycles which provide important clues and can dramatically assist in portfolio performance.
> 
> For example, financial's normally lead the stock market and are one of the first to decline before the market top and one of the first to advance in the late bear phase.




What's normal ? 

motorway


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## It's Snake Pliskin (15 November 2008)

tech/a said:


> Ive heard the same with Forex.
> Liquidity would be one.
> You can trade each direction another.
> You can trade managable parcels.
> ...



Not really tech. 
I am trading the daily now on the AUD/NZD, but I use the smaller time frames to help with entries.

I haven't looked at it hardly. Stop set, target set and let it go. I went three days without looking at it due to travel. 
Forget VSA unless you are interested in a key bar. Then it would be sufficient to use SA only.


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## BBand (15 November 2008)

Keep it simple - trade from the monthly chart !!!!


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## It's Snake Pliskin (16 November 2008)

Amazon just emailed this book link to me.

http://www.amazon.com/Forever-Portf...=sr_1_1?ie=UTF8&s=books&qid=1226840155&sr=1-1

I haven't read it and intend not to.


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## MR. (17 November 2008)

It's Snake Pliskin said:


> Amazon just emailed this book link to me.
> 
> http://www.amazon.com/Forever-Portf...=sr_1_1?ie=UTF8&s=books&qid=1226840155&sr=1-1
> 
> I haven't read it and intend not to.




But it's been reduced from $27.95 to $18.45 
The book comes down in price with the long term stocks.  All fair I guess. 
Ha Ha.


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## tech/a (17 November 2008)

It's Snake Pliskin said:


> Not really tech.
> I am trading the daily now on the AUD/NZD, but I use the smaller time frames to help with entries.
> 
> I haven't looked at it hardly. Stop set, target set and let it go. I went three days without looking at it due to travel.
> Forget VSA unless you are interested in a key bar. Then it would be sufficient to use SA only.





Snake.

My intention was lost in the post.
I meant Stock--pologies.


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## tech/a (17 November 2008)

Before thinking long term----Long we need to see a consolidation for a period of time void of extreme volitility.
We also need to see exhaustion of selling.
These both will be evident in times to come and you wont need to rush in either expecting to "Miss The boat".
It wont be far enough out that you cant jump on!


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## It's Snake Pliskin (17 November 2008)

tech/a said:


> Snake.
> 
> My intention was lost in the post.
> I meant Stock--pologies.




No worries.


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