2014 was another bull market year with both the Dow Jones Industrial Average (NYSE: DIA) and the Standard & Poor’s 500 Index (NYSE: SPY) doing well. As with any time period, certain sectors did well with others disappointing. Oil and natural gas plunged, as did the exchange traded funds, United States Oil (NYSE: USO), and United States Natural Gas (NYSE: UNG), for each. But lower prices in oil resulted in cheaper jet fuel, which sent the shares for Southwest Airlines (NYSE: LUV) and Spirit Airlines (NASDAQ: SAVE) soaring (chart below).
Many previous articles on this site detailed how appealing the prospects were for Spirit Airlines, and Southwest Airlines.
The collapse in price for United States Oil, United States Natural Gas, and other energy securities demonstrated why it is foolish to try to time the market. It also clearly shows why investing for the long term is the best course to follow. In the first half of 2014, oil and natural gas prices were strong. Those owning shares of United States Oil and United States Natural Gas did well.
But, in the second part of the year, the prices fell for each.
That sent the prices higher for Southwest Airlines, Spirit Airlines, and others that spend a great deal for fuel. For those looking for short term gains in energy, it was a brutal year. But those investing for the long term should do well. There is every reason to believe that oil and natural gas prices will rise along with global economic growth.
That is why investors should not try to time the market for any asset class.
Legendary investor Warren Buffett is fond of saying that his favorite holding period is “forever.” That is another reason to buy dividend stocks: the dividend yield provides income when the share price fall. The Oracle of Omaha favors income stocks, too. As 2014 manifested, just like any period of time should, long term is always the best way to invest without trying to time the market!