The Choppiness of Blue-Chip Stock Market Returns

Because I have previously argued that Hershey is one of the best stocks to buy at today’s valuation, I want to discuss the psychological side of what owning this company for the long-term looks like. Ten years is the shortest period of time that I would regard as a qualifier for a long-term investment, so let’s put ourselves in the shoes of someone that bought Hershey stock back in 2005.

Back in 2005, shares of Hershey were available for $52.50 per share. It was earning $2.28, and someone that bought the stock would have locked in an earnings yield of 4.34% as the P/E ratio was 23. The valuation was little bit high–the kind of thing that might knock a point or two off your returns in the medium term but would eventually be burned off as confectionery brands got acquired, existing chocolate production facilities got expanded, stock got repurchased, … Read the rest of this article!