Honeywell Stock Tumbles To Fair Value

If you are a long-term investor, and own cyclical stocks as an investment, the obvious psychological limitation that can give rise to ill-timed selling is the wild fluctuation in earnings that can give rise to even wilder fluctuations in stock price. The profile of an investor that successfully builds wealth over the decades through ownership in these types of companies is the following: (1) he or she must be highly liquid so that there is no forced selling at low prices when general economic conditions are rapidly darkening; (2) he or she must have an even-keeled personality that does not overreact to either good news or bad news; (3) and he or she ought to be capable of buying these stocks on the dips and lows as it can greatly increase the overall compounding rate.

These qualifications are distinguishable from, say, contemplating an investment in Colgate-Palmolive stock which doesn’t really … Read the rest of this article!