Speculating on Dogecoin, Bitcoin, Tesla, and all the sort seldom ends well. You’ve probably heard all the headlines that praised speculators for making considerable amounts of money off their lucky bets. But what you don’t hear too often are the beginner investors who lost their shirts when they could no longer find people to pay a higher price for an asset that they did.
The temptation of getting rich over a short time span is powerful. It can lead investors who are perfectly on course with their portfolios off the tracks, as they fall for the siren song that most likely leads to some steep losses.
The siren song of speculation lures in even the smartest folks
It’s hard to learn that your friend, who knows little to nothing about investments, has been enriched by something like Dogecoin within a matter of weeks. The life-changing returns from Dogecoin’s rally probably won’t happen again. Sadly, many folks who punch their ticket into a so-called opportunity after the fact (after the gains are in) tend to be the ones most likely to be left holding the bag. These folks are the greater fools in the game of greater fools (the greater fool theory has nothing to do with The Motley Fool).
So, instead of speculating with your hard-earned money, you should look to invest it for the long term. In an era of commission-free trades and WallStreetBets, today’s definition of long term is probably the shortest it’s ever been. While commission-free trades are important, they can lead sound long-term investors towards the path of a day trader. And usually, fortunes are made via long-term investment and not flipping into or out of stocks on an intraday basis.
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Forget speculation: Investing for the long term is what you should strive for
In this piece, we’ll have a closer look at a long-term wealth builder in CP Rail (TSX:CP)(NYSE:CP), which is fresh off a nearly 5% pullback on the latest from its ongoing trade war with top Canadian rail rival CN Rail, which has the best offer — currently valued at around US$33 billion.
CP Rail isn’t a Dogecoin. It’s not going to enrich you in a matter of days or weeks, but it will help you build a nest egg at an above-average rate over the next 20, 30, or 40 years. For an investor, that’s really all you can ask for from an investment. Steady capital gains and a generous dividend-growth policy are what you’ll get from the name. Most importantly, it will never shed a majority of its value while you sleep, like Bitcoin and all the sort can.
CP Rail keeps chugging along
While CN Rail is perceived to have the lead in its pursuit of CP Rail’s lunch (Kansas City Southern), I think that CP Rail will come out on top at the end of the day. Why? CP Rail isn’t going to have to tackle the same magnitude of regulatory paperwork that CN Rail may have to put up with. CN’s current offer is reportedly expected to face harsher rules.
These days, investors on both sides are calling for CN Rail to just drop its bid. And I think that’s exactly what CN Rail will do, as pressures mount from all ends. If that means CP Rail walks away with its original deal (or at least a deal that’s less than CN Rail’s offer), CP stock could surge.
When weighing the risk and reward, CP Rail is a sound investment that blows cryptocurrencies right out of the water.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Joey Frenette owns shares of Canadian National Railway. David Gardner owns shares of Canadian National Railway and Tesla. Tom Gardner owns shares of Tesla. The Motley Fool owns shares of and recommends Canadian National Railway and Tesla. The Motley Fool recommends Canadian National Railway.