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Investing.com -- A recent analysis by trading and investing platform eToro has highlighted the importance of long-term commitment in investing, comparing it to loyalty in relationships. The study, conducted in the run-up to Valentine’s Day, used historical data to show that the chances of a positive return on investment increase significantly over time.
The analysis showed that holding the S&P 500 for one year offers a 72% probability of a positive return. This likelihood jumps to 87% if the investment is held for 10 years, and 95% if held for 20 years. Similar trends were observed in the FTSE 100, where the probability of a positive return increased from 66% over one year to 83% over 20 years.
However, the same pattern didn’t hold true for all indices. Holding the STOXX 600 for longer periods of time didn’t yield the same benefits. The chance of a positive return was 66% for a one-year hold, but this figure dropped to 61% over 10 years and 47% over 20 years.
Lale Akoner, Global Markets Analyst at eToro, highlighted the importance of patience in investing. Akoner stated that time in the market is more beneficial than timing the market, emphasizing that it’s crucial not to panic-sell at the first sign of trouble.
eToro’s analysis also examined the performance of specific stocks over the past decade. Investors who remained committed to companies like Broadcom (NASDAQ:AVGO), Arista Networks (NYSE:ANET), and Taiwan Semiconductor Manufacturing Company (TSMC) during periods of significant decline were rewarded with substantial gains. For instance, Broadcom’s share price plummeted 53% from January to March 2020 but rebounded with a 1,450% recovery by January 2025.
On the other hand, stocks like Zoom (NASDAQ:ZM), Peloton (NASDAQ:PTON), and Docusign, which initially showed promising rallies, ended up underperforming the market. Peloton experienced the most dramatic swing, with an initial rally of 870% followed by a 98% plunge. Today, Peloton’s share price is far from its initial public offering (IPO) price.
Akon concluded by advising investors not to be swept away by fleeting trends and to be aware of their investing goals. The analyst also noted that companies with strong fundamentals can go through rough patches, but investors who stay committed may be rewarded in the long run.
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