A long-term investor shouldn’t not care about the “bull or bear” discussion. If you are a long term investor who puts his money in companies that have track records of raising their dividends annually, why would you care?
If you are a long-term shareholder who plans to invest in shares of AT&T (NYSE: T) for example, which has raised its dividend every year since 35 years and collecting a fat 6.3% (and steadily rising) dividend yield, do you really care if the stock falls 10% or even 20% next year?
Why would it really matter if the stock is trading at $30 or $50 in 2020?
There are only two times when a stock’s price should matter:
1.) When you’re buying the stock and
2.) when you’re selling!
If you are adding to your holdings, then yes, price matters. You don’t want to pay too much. Of course, if the stock slips 10% or 20%, you can buy more shares at a bargain. When you like AT&T at $32 you will love it at $27. But when you are selling a stock the price is even more important.
Many investors are influenced by the market whether they’ll buy, sell or hold a position. When markets fall, investors get nervous and sell their stocks, often for a loss. When prices rise, they typically buy more stock, paying higher and higher prices because they don’t want to miss out.
As long as the fundamentals of a company remain strong, you’ll make more money holding quality stocks (particularly strong dividend payers) over the long term than you will if you try to trade in and out of the market.
Sven Franssen