What are some tips for finding good long-term investments?


Quick Answer

Tips for finding good long-term investments include selling the losers and riding the winners, not chasing hot tips and resisting the attraction of penny stocks, according to Investopedia. Long-term investors stay with a consistent strategy and focus on the future.

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What are some tips for finding good long-term investments?
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Full Answer

As part of efficient long-term investment strategies, investors should know when to get rid of losing stocks and keep stocks that are appreciating, explains Investopedia. Too often, investors do the opposite, cashing in on winning stocks and holding on to stocks that have decreased in value hoping they rebound. Purchase of stocks should also be based on thorough and comprehensive research and not on tips that may not be reliable or well-researched. Relying on such information is equivalent to gambling, which can be harmful to long-term investment strategies. Because losses on penny stocks can be small, they can accumulate. Such stocks are also much more volatile, so they should be avoided by long-term investors.

Although there are many styles and strategies that can be effective, once a long-term investor settles on a strategy, he should stay with it, states Investopedia. Constantly switching strategies is practiced by market timers, those who constantly try to predict the future direction of the market, and is not recommended for long-term investors. Basing decisions on the potential of stocks and not on their history is another effective long-term strategy.

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