Taking the long view


In a recent article, I introduced readers to the concept of Long News advocated by Kirk Citron.  We can apply the concept to investing by taking a long term view when we evaluate the impact of news item.

My caveat is that we also have to apply common sense.  After all, there are two certainties in life, namely, death and taxes.

Below are some headlines taken from the Business Section of the Sydney Morning Herald this week, and the implications for a five year investing timeframe.

New twist in battle

Gina Rinehart’s children have been granted access to their trust.  There is a chance the outcome may have a spillover effect in relation to the iron ore industry in WA. However, this factor pales in significance to the issues we have canvassed in earlier articles concerning Fortescue Limited (ASX: FMG).

Shares slide on Europe worries

This is certainly newsworthy, but we shouldn’t let daily news sway our investing decisions. That said, any falls can be good times to look for bargains that the market offers in times of pessimism.

Billabong dumps boss

To holders of Billabong Limited (ASX: BBG), this is important long term news, given the announcement of a new CEO. Credentials, track record and shareholder-orientation are all important considerations. If she can replicate the success  Sally MacDonald had with Oroton Ltd (ASX: ORL), shareholders will be richly rewarded for their patience.

Gillard vows to cut company tax, sometime

Government policy can have a long term impact on your investments.  Be aware that the impact usually arises from totally unintended consequences. A reduction in the the corporate tax rate should boost corporate cash flow and profits, all things being equal.  The effect compounded over 5 to 10 years can be significant.

New life ahead for zombie Gunns

A very informative and interesting article.  Mr Manning has done most of the legwork for anyone interested in Gunns Limited (ASX: GNS).

Management reshuffle at David Jones

We have covered retail in several articles. This latest news from David Jones Limited (ASX: DJS) means more disruption and raises more questions concerning management’s ability. In retailing, management is all important. Holders of David Jones have to decide whether the current management is capable of guiding the company through major structural changes affecting the industry.

Foolish Takeaway

The application of a long term view to news items will have a two-fold beneficial effect on investors.  The first effect is the prevention of knee-jerk reactions and short-termism.  The second effect is clarity of thought and greater insight on the investing environment, fostering better decision-making.

If your looking for dividend stocks to add to your portfolio, look no further than “Secure Your Future with 3 Rock-Solid Dividend Stocks”. In this free report, we’ve put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

 More reading

The Motley Fool‘s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Taboola Articles

OUR #1 DIVIDEND PICK FOR 2016...

Forget BHP and Woolworths. This "dirt cheap" company is growing like gangbusters, and trading on a 5.6% dividend yield, FULLY FRANKED (8% gross). With interest rates set to stay at these low levels for years to come, for hungry investors, including SMSFs, this ASX company could be the "holy grail" of dividend plays for 2016.

Enter your email below to discover the name, code and a full investment analysis in our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2016.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.