Value Investors: Are You Buying and Holding Forever? Think Again

Value stocks are great, but if you don’t have a goal in mind that stock can quickly turn from value to volatile. So here’s what to do.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published February 9, 2024 8:15 pm EST

Investors love the set-it-and-forget-it attitude to investing. And I totally understand that. It has led to the rise in exchange-traded funds (ETF), the introduction of more investment accounts, and even more market activity.

Yet when it comes to value investors wanting to take on a set it and forget it outlook, there is a word of warning I would want you to consider.

Retirees sip their morning coffee outside. — Source: Getty Images

Nothing lasts forever

We all want to be like Warren Buffett and find those value stocks that are set to climb higher and higher in the years and decades to come. After all, the Oracle of Omaha has done quite well, hasn’t he? Indeed, this top investor has chosen the best of the best. And he has a lot of money to put towards those stocks.

The thing is, while there are value stocks out there, not all of them are worth keeping in your portfolio for decades and decades. The companies that Buffett bought and have surged to the forefront, ones like Amazon (NASDAQ: AMZN) and Apple (NASDAQ: AAPL), are the exception, not the rule.

For most companies, then, if you’re looking for value there should be a plan in place. That’s because most companies go through rough patches. Most companies also eventually close up shop! So here’s what I would consider.

Have a goal

You have goals for your finances, right? Whether it’s retirement or a trip or a house, there are goals you want to reach by a certain period. And that should be the same when it comes to value stocks as well. You do your research, you come up with what you believe is a reasonable price during a reasonable period, and you get in and out at the right times.

Sure, there can be those “what if” moments. “What if I had stayed in just a bit longer? I would have got so much out of it!” Well, what if you did? What if you stayed in longer, and the reverse happened? Take BlackBerry (TSX: BB) for example.

BlackBerry stock surged to the top, only to come crashing down. It’s now a floundering stock that doesn’t look likely to reach three-digit status again. I’m not saying you should be selling stocks after a surge and watching the market like a hawk. But there are still ways that you can get in, and get out easily.

Set it and forget it

Here is where you can really set it and forget it – not buying a stock and forgetting about it for decades. Instead, set up stock alerts. That way you can genuinely forget about the value stock while it climbs higher and higher. Then, once the company reaches a price alert, you can sell it knowing you’ve received exactly what you wanted. No more, but no less either.

Now, there are some great value stocks out there to consider. But one I would pack on for now is Royal Bank of Canada (TSX: RY). RBC stock is a great option as it looks like it’s getting back to normal the quickest, but is still lower than its all-time high. The growth comes from its acquisition of HSBC Canada, which will solidify its position as the largest Canadian bank even more for the foreseeable future.

Yet RBC stock still trades at 12.3 times earnings, with a dividend yield of 4.23% to lock up now.
So if you want a value stock you can look forward to in the next year and beyond, this is one I would consider buying in bulk right now. And then, set a goal you can forget about until that alert comes in.