When investing, it’s important to get the question you’re trying to answer right. When I discuss investment opportunities that look particularly intriguing, I am not making the statement: “This is the cheapest price the stock will ever see.” I don’t attempt to answer that question because it’s something I never could get right—it involves predicting what *other people* will do at a particular point in time, and at best, it’s something that would never amount to more than speculation.
One of the advantages that comes with the turf of buying and holding a particular stock for a long period of time is that you hopefully become familiar with it in a way that someone taking a cursory look at the stock may not notice.
For instance, it is well known in the investor community that Disney typically spends four times as much money repurchasing stock as it does paying out dividends. This fact, coupled with the Disney Board’s decision to pay out the dividend annually, can partially explain why income investors looking for retirement income avoid the stock altogether. There aren’t a whole lot of people in the world who can look at a 1% yield and say, “Yeah, that’s something I can rely upon for retirement.”