Look at history, but don't count on anything
OP, youve received some pretty good advice on this thread and, FWIW, Im going to add my two cents, most of which has already been said here.
The old adage buy low, sell high is valuable, but that doesnt mean that the stock itself has to go from low to high for you to make a profit. You can make a profit when a stock goes from high to low too. (This is generally advised for advanced investors though.)
But a key to investing is to think about your timing. Generally most ordinary investors will buy and hold. Sometimes they get lucky and get out at the right time. Other times, like your father who purchased Nike and held on for a long time, they make a lot of money. Similarly people did that with Microsoft and countless other investments. History is a good thing to look at for information, but theres never a guarantee.
Look at Googles last five years. You could have purchased it at $400 a share almost five years ago. You could have sold it at the same price three years later. In between you could have sold it at over $700. What if youd waited and then seen it shooting up in 2007 and decided to purchase it at $600? Would you have had the insight to sell at $700? Or, would you have thought, as it dropped from $700, that it would head back up all the time wondering when it was going to turn around? Would you have been so discouraged when it got to $300 that you would have cut your loses and sold at that price, losing 25% of your initial investment.
If you had, youd have lost your opportunity to earn 50% a year later to sell at $600.
Most stocks are not quite as volatile as Google, but this is just one example of timing. Staying on Google, if youd purchased it when it was a pretty new stock on the market (2004 or 2005) for about $200 per share (while most people were telling you that you were crazy to invest in an unknown company trying to compete against Alta Vista, Yahoo, AOL, Microsoft, etc.) and just held on, you might have tripled your investment if youd just held on and forgotten about it.
Pardon my long ramble. Its just that I have a friend who purchased a couple shares of GOOG when it was a bit over $500 a few years ago. He panicked when it dropped and lost more than 40% of his investment.
Id hate to see that happen to you.
In fact, going in, let's say you purchase a stock at $100 and the next day it drops to $85, would you lose confidence and sell, losing 15%? When you make an investment in an individual stock, you should set some limits on when to sell if it goes up and if it goes down. You should also have a time limit; if not to sell, then at least to reevaluate.
Good luck.
