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ASX investing tips: Why “you’ve got to know when to hold ‘em”

Motley Fool articles are normally packed with stories about ASX shares that could show strong growth and offer excellent returns for investors, but this one’s is a little different! No hot tips or clever investment strategies – but the outcome can still be very financially rewarding.

American country singer Kenny Rogers had a big hit way back in 1978 called ‘The Gambler’. The song’s chorus contained some sage advice for poker players that also applies just as much for share market investors.

We tend to think playing in the market requires constant daily vigilance, quick reflexes and – especially for day-traders – a rapid turnaround in their holdings. But ‘The Gambler’ hints at another type of profitable investment.

When you’re on to a good thing… 

It can happen in so many ways. Perhaps your first job involved a share offer from your employer many years ago with a yearly top up of extra shares. Maybe a maiden aunt passed away and bequeathed a stock portfolio to you. Or perhaps you put a toe in the water with a share market investment as a callow youth.

You may have forgotten you once owned them. Or perhaps you have that bower-bird mentality that makes you want to hang on to what you’ve got.

No matter how it started, lots of people have made lots of money – not by actively trading –but by sticking to their investments.

Some “Set-and-Forget” case studies

Back in 1999, you could have bought stock in Commonwealth Serum Laboratories, now known as CSL Limited (ASX: CSL), for the princely sum of $3.70. At that price, you could also have been inclined to buy a significant number of shares – say 300.

Well, CSL shares are now going for more than $285 (at the time of writing). That would have seen your initial investment of $1,110 grow into the very tidy return of $85,500!

Maybe the banking sector attracted your attention back before the turn of the millennium. Back 28 years ago, when the Commonwealth Bank of Australia (ASX: CBA) floated, it made shares available to the public for $5.40.

Having lived through the recent Royal Commission and subsequent court proceedings, CBA’s share price today exceeds $82 (at the tie of writing), making an initial holding of just 1,000 shares worth over $82,000 today.

What about the retailers I hear you ask? Well, you could have seen a gain of more than 50% in the past 5 years had you chosen to invest in JB Hi-Fi Ltd (ASX: JBH). A shorter term and a smaller gain than the previous examples, but still impressive with no daily vigilance, actions or anxiety involved.

“You’ve got to know when to fold ‘em” 

That Kenny Rogers song ‘The Gambler’ goes on to say that it’s equally important to keep your eyes on the prize and know exactly when your long-term investment is threatened, turns sour or loses its impetus. So be prepared to exit investments when these signs appear.

But the fact remains, great returns are achievable simply by choosing the right stocks in the first place and then sticking to your investments. Good (long-term) luck!

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Motley Fool contributor Greg Butler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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