With all the doom and gloom stories in the news regarding the share market you’d be forgiven for thinking that everything is going down. Well while many share prices might be decreasing in price there are still plenty of them that have increased in price as well in the last twelve months.
Yep that means there are still good stocks that are increasing in price, even in today’s volatile market.
So I bet you want to know which companies they are don’t you.
In fact buying into companies whose stock price goes up year after year is one of my simple rules. I always believe that if you have a company with strong fundamentals whose stock price regularly increase at least 10% p.a. (and the company has been around at least five years) then it’s a good bet to invest your money in.
Generally speaking, the history of the stock is a good indication as to whether it will increase in price in the future as well (as long as it’s a good company of course).
So anyway, out of the 30 companies currently listed in the DJI (Dow Jones Industrial Average) over the past twelve months 22 of them have made a profit (based on current stock prices as at 15 August 2011). Yep that’s right 22 out of the 30 stocks in the DJI have increased in price in the last year. Gone up. Made money for investors.
Those are the real facts Jack.
And here they are:
Some of them have increased by huge amounts. Caterpillar (CAT) by 32%, IBM by 31%, Coca Cola (KO), McDonalds (MCD), Exxon (XOM) all by over 20%.
If you had invested in these stocks you would now be laughing all the way to the bank. They’ve increased substantially in just one year.
Now I know what you are saying, that past stock price is no indication of future stock prices. And that would be true. But if you are dealing with strong companies the odds are in your favour. Buying into unknown companies or smaller cap’s does represent more risk, and while there always will be risk in the stock market your chances are significantly decreased when dealing with blue chips, strong fundamentals and a history of good returns for stockholders.
Right now we’ve just been through a scary bear market. If history is anything to go by then following every bear market is a period of increased volatility (sounds like right now) and either a sideways trend or a highly profitably bull market. I don’t have a crystal ball but going on history I think right now could be an excellent time to take advantage of the cheap prices of stocks, especially if they continue to increase in price like they’ve been doing (despite what the news is telling you).
Investors who have taken advantage of buying into periods of maximum financial opportunity (like now) have made the most money in the markets long term.
Will that investor be you?
I know I’m in a buying mood.