I've have always been a fan of holding equity securities long-term. Now, long-term can mean different things to different people. I’m talking about five to ten years or more. The critical component of that perspective is buying quality companies at reasonable prices (think discount or sale).
To identify quality companies, it is essential to review their fundamental metrics over time. The "story" behind the stock is important, but the fundamentals are equally important. Are the fundamentals moving, over time, in the right direction? This does not mean that the companies don't have setbacks. Like people's careers, stocks have setbacks at times. The question is how has management dealt with those setbacks. The proof will be in the pudding as they say (the numbers silly!).
When assessing how management has dealt with setbacks, the real key is in the numbers/metrics. If you listen to any CEO, you would think every company is killing it. Clearly, there are those that do and those that don't.
Sometimes equities suffer setbacks in their market values. This is a normal ebb and flow in the way that markets see the company's prospects. Like the bar or restaurant scene, it can be hot and then it's not when the crowd moves on (herding). Short-term changes do not depreciate long-term values if management is seasoned and capable. In fact, it can provide a great entry point to own an "out of favor" company.
In the rear view mirror, drops in a stocks prices are often negligible for quality companies the further away in time from the drop. For example, 2008-09 looks like a small inflection now. Nvida was like that in 2010 and 2011. Costco was in the same boat. Applied Materials was similar to Nvida.
So stay clear of the crowd as they herd to the latest and greatest bar scene. You may find a gem. And don't forget the old children's story, the tortoise usually beats the hare.
Be smart, be well-read, be aware and be successful.
