I just recalled a few months ago a friend eagerly asking me to recommend a stock that she can buy now and hold forever for 40-50 years.
Of course my answer is I DON'T KNOW. Its not that I don't want to share, indeed I am very honest to her. I really don't know. Besides I also don't really understand her question and don't know what she wants. To help her to make the question more specific, I assume she is targeting to invest 1 million today, every year it will pay out dividend of 200k at least, and 30 years later the 1 million will turn into 100 million. This should be ideal enough.
We are too used to hear of classic examples of stocks that can hold forever, where it turned 10k investment 40 years ago to 1 million today (includes reinvesting all dividends and bonus shares) for instance Coca Cola, Gillette (P&G), Wal-Mart, American Express, Public Bank, Maybank, Genting...Those are such an inspiring story, no wonder people are so keen to find the next Coca Cola.
As a matter fact, how many investors who invested in those shares 40 years ago already expected this kind of return after 40 years? Besides Prophet, I wonder any human being can predict what will happen after 40 years.
In real world, a practical long term fundamental investing style should be identifying companies with great potential, invest only at good bargain, continue to monitor the progress of the business, to see if it continues on the right track, or something has structurally changed.
I felt sorry for my friend for not being able to give her a direct answer as I am not a Prophet.
Everybody likes to have money coming in easy. No need to think, no need to work, no need to bother, just tell me the answer will do (will people tell you the true answer?), I just want money to come in easy will do. Everybody DREAMED of this, and HOPE it happen in real life. The culture is so common in this country.
When HOPE and GREED are mismanaged in stock market, it's time for disaster.
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