1. Long Term Investment
Candlestick Chart Profits Training Series
www.CandlestickForums.com – Long Term Investment A long term investment is typically
thought to be a stock, bond, or other equity held longer than five years. For income tax
purposes a long term investment is one that is held for a year or more and is commonly subject
to a different, and lower, tax rate than an investment held for less than a year. Good long term
investment stocks will typically have a strong cash flow combined with reasonable stock prices.
Investors use the price to earnings ratio as a guide to whether or not stocks have been priced
above their intrinsic stock value. If the market has driven a stock price too high its forward
looking earnings will not be sufficient to justify its current price. Investors also look for a margin
of safety in a long term investment. For example, a company with money in the bank, a low debt
to asset ratio, and salable assets will be able to weather stock market crashes when other
companies will go bankrupt. If such stocks are well paying dividend stocks as well, they will
provide a good return on investment in quarterly dividend checks and appreciation of stock
value over the years. In long term investing as well as day trading the use of technical analysis
tools such as Candlestick pattern formations allows both investors as well as day traders to
anticipate market trends and market reversal in buying stock and selling stock at optimal prices.
A long term investment stock portfolio is normally diversified. Diversifying a …
Tags: Candlestick Charts, Investment, Long, Term
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