Take the long view

Article Excerpt

Investors often ask how long they should hang on to a disappointing stock. There is no single answer, but you should never base any investment decision solely on a rise or fall in the price of a stock. Stock price changes usually depend on a variety of factors, including economic, industry and company-specific issues. Also remember that the stock market anticipates things, and no trend lasts forever. For instance, some industrial manufacturers have suffered due to rising oil prices. But oil will eventually come down. If a company remains profitable despite a sharp rise in a key input, think how much better it will do when the price of that input subsides. Another concern is Chinese competition. China is now turning out a wide variety of high-quality goods at very low prices. This has undoubtedly hurt many North American manufacturing companies. But some are taking advantage of this by outsourcing more manufacturing to low-cost countries. That frees them up to focus on more…

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