Market Mavens – Stock Research Made Simple

The Same Stock but Two Very Different Charts

ith Good Stocks, Time Is on Your Side Peter Lynch once said, “The real key to making money in stocks is not to get scared out of them.” That’s exactly right. When you own a good stock, time is on your side. You may not realize it each day and each week, but after the long haul, good stocks are rewarded. I’ll give you a good example. One of my favorite consumer stocks is Clorox (CLX). The bleach folks have been big winners for many years. Check out these two charts of Clorox. Here’s CLX since 1990: Over the last 30 years, shares of Clorox have gained more than 34-fold. That’s an outstanding track record, and it’s beaten a lot of well-paid hedge fund managers. Apparently, bleach is good business. Now here’s the exact same stock, but it’s a five-year slice of the first chart. Well, that’s quite different. When looking at the first chart, there’s a natural tendency to see the trend as being perfectly obvious. But that’s only true in retrospect. Living through it is quite another story. The second chart seems hectic and uncertain. Bear in mind, that’s not a small slice of the first. It’s five years.

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