If you check out the 10 most popular stocks owned by members of Congress five years ago, eight of them are on the list today. And the two not on the list are in the top 25 today. So is it that members of Congress are just holding on to stocks longer?
That’s what I think, but let me explain why…
In 1940, the average holding period for an investment was seven years, according to William Hutchings of the Financial News. By 2007, that period had shrunk to just five days.
But you don’t have to trade every day… or every week… or even every year to beat the market. In fact, your success actually increases the fewer trades you make and the longer you hold.
A recent study by mega-investment firm Oppenheimer showed that the S&P 500 index has NEVER suffered a loss in a 20-year period (measured in rolling monthly periods), dating all the way back to 1950.
Of course, we all know you can’t say the same for holding stocks for a year or two. When you hold stocks for a short period of time, your odds of losing money are much, much higher.
And you can lose a boatload of money in a hurry…
In fact, in its worst one-year period, the S&P 500 dropped 44.8%. No wonder Warren Buffett has always said his favorite holding period is “forever.”
I think these shorter holding periods for average investors are hurting their returns.
So yes, it appears members of Congress are buying many of the same well-known stocks as everyday investors, who are now holding for shorter periods than ever and hurting returns.
It was with this thought in mind a few months ago that prompted me to have StreetAuthority’s research team update our report on “Forever Stocks.” These stocks are ones you can buy and hold practically “forever” and watch the profits roll in. Since first releasing this report, these 10 stocks have returned on average 40% in just a few short years.
If you’re a longtime StreetAuthority reader, you’ve likely heard us talk about some of these stocks before. In fact, a few of the names (like Cisco Systems, Inc. (NASDAQ:CSCO) and Intel) are widely owned by members of Congress and are featured in the list above.
But what you might be surprised to know is that some of our “Forever Stocks” are ones that few people are aware even exist. If you’re interested in finding out more about my list of “Forever Stocks” and how you can spot other stocks that should be added to the list, I invite you to check out this short presentation.
– Elliott Gue
Warren Buffett’s Top 5 Stocks
Buffett’s firm, Berkshire Hathaway, holds dozens of stocks. But these five make up 75% of its portfolio… worth $65 billion. Click here to get Buffett’s top 5 stocks plus his 16 latest buys, FREE.
