When people discuss stock prices for a given business, they often perform their analysis by looking at the highest recent price that a stock achieved and then compare it to the subsequent low. With a business like oil giant Chevron, they might point out that Chevron’s stock price hit a high of $135 per share in 2014 and then fell to $69 in 2015. And then this 48% paper loss is often touted as one of the risks with stocks.
These types of business risks can be dramatically mitigated if you perform a more wide-reaching analysis that gives a more clear-eyed view of the risks associated with business ownership if you incorporate the advantages bestowed by dividends and general business growth that occur over time.
With a business like Chevron, you can modify the question by saying: “Okay, what happened if I owned the stock at the highest possible point … Read the rest of this article!