Check out this article about long term vs. short term investing strategy. Anyone who has held onto a lot of microsoft stock for a decade or more has made a killing!

"My friend swears he's learned his lesson.

Back in July 1995, this friend -- let's call him Charlie -- bought Microsoft at what turned out to be the highest price it would see that year. The stock was down 15% in no time, and Charlie was worried. He was smart enough to know the market is the best wealth-creating machine available to us regular folks, but stocks to him were sort of like husbands to Elizabeth Taylor. He liked them well enough, but he tended to give up when things got a little rocky.

In a matter of weeks his paper loss was approaching 25%, and he couldn't stand it anymore. He bailed out.

Needless to say, the next few years were even rougher on Charlie as he watched Mr. Softy march steadily higher. It achieved 10-bagger status at the height of the bull market in 2000, but even today it's more than 400% higher than when he sold.

Get ready for a 25% drop
As Tom and David Gardner tell their Motley Fool Stock Advisor members, you have to expect significant dips from some of your stocks, and you must remain firm if you've done your homework. Otherwise, you sort of screw up that legendary investing formula by buying high and selling low.

This table should really drive home the point for you. These are true all-star performers from the past decade, yet investors who bailed out on them missed out on some truly life-changing gains.

Company


10-Year Gain


Largest Drop

Cisco Systems (Nasdaq: CSCO)


363%


85%

Nokia (NYSE: NOK)


497%


80%

General Dynamics (NYSE: GD)


368%


50%

Starbucks (Nasdaq: SBUX)


698%


45%

Harley-Davidson (NYSE: HOG)


601%


34%

Countrywide Financial (NYSE: CFC)


425%


55%

Potash Corp. of Saskatchewan (NYSE: POT)


314%


55%
Returns adjusted for dividends.

So, the lesson Charlie learned is that practically all of the great superstar stocks of the past decades have dropped at least 25% at one time or another. It will be very hard for you to find one that hasn't.

Hey, I'll be the first to admit that many stocks drop 25% and keep dropping. That can happen when a business that has no real competitive advantages to begin with gets the rug pulled out from under it. It happened to me several years ago, and like a shell-shocked boxer, I still duck when I hear the name CMGI. (Shudder.)

Lesson learned
We've all learned some things throughout the years. But if, as Tom Gardner says, you can invest for decades, add money to your existing holdings steadily over time, and stay committed to focusing on truly great businesses, you stand to make a fortune.

For the four-plus years since Stock Advisor was launched, the Gardners' recommendations have returned an average of 64% (compared with 27% for the S&P 500). Interested in finding out which stocks to start with? Try a no-obligation 30-day free trial and you'll see Tom and David's five best buys for new money now. Here's more information."

http://www.fool.com/investing/general/2007/03/20/get-ready-for-a-25-drop.aspx?source=iflfollnk0000003

yeah - stock marketing investment is volatile. Unfortunately 85% of trading is now speculative and the North American economies have shifted from actually producing goods to shuffling money around through wires. Some win, some lose, while other countries make stuff and sell it for a profit.

It happened to me several years ago, and like a shell-shocked boxer, I still duck when I hear the name CMGI. (Shudder.)



That is kind of funny, Cause I am now up 18% in it.

Holding on to stocks and pumping money in them is ok for the long term if you're not interested in doing much legwork. Expecting more than a 9-14% return on them though is serious wishful thinking. If you want to make money you need to stay on top of it, consistently monitor new projects and ventures that firms are exploring, and do some serious calculations to ensure that the firms agents are in fact working towards shareholder interests. Yeah, some firms will post huge gains. However, excess free cashflow often times means excess stupid investments by a company that in turn lose money. Check out the money market, investing in foreign currency can also produce some nice returns.

good post

the U.S. doesn't really manufacture much anymore, a very disturbing trend

Lots of poor decisions by US firms in the past, and cheap labor costs overseas. It only makes business sense at this point. Most companies wouldn't be able to stay afloat if they still manufactured here.

The company I work for buys most of its subassemblies from China (Made in China, Assembled in USA). It costs us a fraction as much to have the parts manufactured there and shipped to us for final assembly/testing rather than just build 100% of what we do on-site. I do some incoming Q/A (was originally hired for that, but I think they misunderstood my "inspection" history) and you definately get what you pay for. They supposedly have a Q/A department out there, but we still end up rejecting about a fourth of the parts we receive because they're missing parts, poor quality, etc. Each lot has its own problems, sometimes parts make it out the door before we find the flaws. But again, it's still cheaper for the company to buy new shit from china and replace the bad stuff.

Sucks, yeah... takes jobs away from the USA... but for a business to survive, it has to do what makes sense. But being in this position really makes me trust the "Made in USA" vs. foreign stuff when it comes to overall quality.