- (0:30) - Holding Stocks For 20 Years
- (4:45) - Microsoft's 20 Year Return
- (11:00) - Stocks Hitting All Time Highs: What To Watch
- (16:55) - Episode Roundup: MSFT, AMZN, MU, UNP, FAST
Welcome to Episode #171 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
In this episode, Tracey is going solo to discuss long term investing.
Finding winning stocks over 10, 20 or 30 years seems easy, in hindsight. But buying and holding stocks isn’t easy.
No stock goes straight to the sky forever. All stocks have sell-offs, corrections and even “dead” periods where they do relatively little.
Technology Stocks: The Current Superstars
In the 1990s, investors were buying pharmaceutical and technology stocks, especially Internet start-up companies, to try and beat the market averages.
Post-2009, the stocks of choice appear to be, once again technology names, but with an emphasis on content and social media, as FAANG has dominated the conversation.
The thinking goes, that all you have to do is buy and hold some of these names and you’ll out perform.
But, it turns out, technology isn’t the only game in town.
Microsoft’s Return Over the Last 2 Decades
Microsoft’s MSFT shares are soaring and recently hit new all-time highs. Over the last 5 years, shares are up 194%.
But recent investors should be cautious about applying the recent stock run to a longer time period.
Microsoft’s own share calculator projects that $3,000 invested on April 1, 1999, during the mania of the dot-com boom when the stock was soaring, is worth just $7,612.65 today, without including dividends. While that’s a return of 154%, which isn’t too shabby, it is well under the recent 5-year return.
Many of the hot 1990s technology stocks had “lost decades” to start the 2000s. Shares fell during the dot-com bust and didn’t recover until well after the Great Recession.
From Apr 1, 1999 to Apr 1, 2009, Amazon AMZN shares had a total return of a loss of 6.4%.
And there was no dividend for shareholders to take comfort in either.
Micron MU is another underperformer for long-term investors. Since 1999, the shares have returned just 42%.
Investors would have done better in the S&P 500 or the NASDAQ indexes during that time.
Look Beyond Technology
There’s a myth that technology stocks are where all the big winners are.
This year, several other stocks, in addition to Microsoft, have been hitting all-time highs but they aren’t getting the same attention.
1. Union Pacific UNP is a railroad founded in 1862. Its shares are hitting new highs. From Apr 1, 1999 to Feb 1, 2019, the shares returned 1,020% which easily beat Microsoft during this period, which returned 189%.
2. Fastenal FAST is an industrial supplier of nuts and bolts. It went public just one year after Microsoft, in 1987. It, too, is hitting new highs. Since 1999, its shares are up 955%, also easily outpacing Microsoft.
What else should you know about long-term buy and hold investing?
Tune into this week’s podcast to find out.
[In full disclosure, the author of this article owns shares of AMZN in her personal portfolio.]
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Union Pacific Corporation (UNP) : Free Stock Analysis Report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Fastenal Company (FAST) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Micron Technology, Inc. (MU) : Free Stock Analysis Report
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