Hold a good stock as long as profits continue to grow at least 20%. The best stock market gains are made by owning a great stock for years and years.
It’s hard to hold the best stocks, since they buck like bulls, trying to shake off the uneducated investor.The best stocks have wild swings in price — get used to it.
The chart above is the same ten year chart we saw of Dell earlier. Ten year charts have annual profit growth rates along the bottom. One year charts utilize quarterly profit growth instead.
Notice at the bottom of the chart profit growth never slipped below 20% during the time Dell was a stock market leader. This was a buy-and-hold stock until it turned down in late 2000.
Since profits grew 24% in 2000 (the year the stock turned down) we should take a closer look at that time period, to see if we find any sell signals.
