What Does Long Term Actually Mean?

There was a post at Seeking Alpha about client holding Johnson & Johnson(JNJ) with the title JNJ Is Not A Good Long Term Investment For 2012. This was a pretty funny headline. The author made a bearish case mostly noting the lawsuits and image problem. The author went on to suggest a debit put spread on the stock (a bearish strategy).

The conclusion he drew and the trade he suggested will  either turn out to be right or wrong but more interesting is the question of what long term actually means. If the author of the above article is an options trader then the rest of 2012 could easily be long term. I’ve owned JNJ for clients since I started this phase of my career in 2004 and hope to hold it forever.

This is a recurring theme here. For most market participants, picking good stocks or suitable funds to be held for the long term is better than a lot of short term trading. Clearly plenty of people have success with shorter term trading strategies but that does not make it ideal for most participants.

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— Random Roger

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About the Author: Random Roger