Buying and Holding Does Not Mean Sleeping

Chevron (CVX): bought at $84.83 on 8/21/20, sold at $94.80 on 1/19/21.

Your humble blogger hasn't visited a casino in a couple of years and scratches that gambling itch by dabbling in short-term trades.The record is mixed and ST trading can't be relied upon as a source of income. The long-term approach is buy-and-hold for 95% of the portfolio and has worked much better.

Last summer the recession wrecked the fossil-fuels industry. The large oils, e.g., Exxon and Chevron, fell to less than 50% of their two-year highs. They became attractive investments, as their dividend yield was near double digits and provided protection against further drastic declines. Also, I guessed that the switch to alternative energy would occur more slowly than the optimists predicted and that when the world economy came back these stocks would show healthy gains.

I bought Chevron (CVX) as it climbed back to $84.83 on August 21st and watched bemusedly as it fell nearly 20% over the next couple of months (the $1.29 quarterly dividend provided a smidgeon of comfort with its 6% annualized yield).

When CVX rose after the November election, I felt some measure of vindication and planned to hold it for a couple of years at least. The economy will come back eventually, fossil fuel usage--probably not coal--will surge, and Chevron, Exxon, Schlumberger, Occidental, Apache, etc. should all be good investments.

Recently there has been a spate of good news about battery technology, which is bad news for the fossil fuel industry.

Tesla announces ‘tabless’ battery cells that will improve range of its electric cars

Inexpensive battery charges rapidly for electric vehicles, reduces range anxiety

Range anxiety, the fear of running out of power before being able to recharge an electric vehicle, may be a thing of the past, according to a team of Penn State engineers who are looking at lithium iron phosphate batteries that have a range of 250 miles with the ability to charge in 10 minutes...The researchers also say that the battery should be good for 2 million miles in its lifetime.

If I had to guess, I think Chevron still has room to run. But there's no sense being a hog. I took my 14.8% profit (gain plus dividends) over 5 months (35% annualized) and got out.

Even if you're buying and holding, you have to check your assumptions occasionally.