Online long term investing would seem, to many, to be a contradiction in terms. We typically think of online investing and trading as being short term and taking advantage of fluctuations in the prices of stocks, options, futures, and commodities. However, a recent survey of Canadian investors indicates that many engage in online long term investing. According to the survey as many as eighty-five percent of responders use online tools for online long term investing or a combination of long term investing and short term investing/trading. Online long term investing gives the investor prompt access to fundamental and technical information. It also gives investors the ability to bypass traditional stock brokers and their commissions. Doing fundamental analysis of stocks will be the same with online long term investing as with the print media but much quicker. Obviously technical analysis done to optimize buy and sell prices will be quicker with the use of online tools.
Online long term investing can be as simple as using online tools of one’s brokerage firm in order to find promising stocks or to efficiently compare one stock with another. It can also be complex. Day traders use computerized trade stations in order to follow second by second price movements. A trader can easily use tools adapted to minute by minute trading in order to enter or exit a long term stock position at the most optimal price. Picking new winners in the post-recession world can often be more efficient and more profitable by combining standard stock research techniques with online long term investing.
This example goes back a few years but is a good example of the possibilities in online long term investing. When Xerox was coming out of a slump in the early 80’s it became a takeover target. The stock was sound, after Xerox divested itself of insurance company holdings that were a dismal failure after a hurricane hit the Gulf of Mexico. The company was writing off losses from its failed foray into insurance so that it appeared not to be making any when its printer/copier business was quite profitable. The stock was underpriced which was why the takeover was attempted. However, the takeover failed. The attempt ran out of money and was highly leveraged. When these folks had to back off they ended up selling at lower and lower prices. Xerox dropped from over $60 a share to under $30 a share in a day. Two days later, after investor had a bargain shopping holiday, the stock was back to its previous range and on its way to a stock split. Those using online long term investing can take advantage of this type of situation by doing sound investment research and using the internet in order to take advantage of short term price fluctuations. Investors need always remember that investing online may speed up the process and may provide access to more data but it is through the use of a sound investment strategy that profits are made and losses contained.