Let's get our thinking right on this. LTHs assume the same risk as those who bought the stock yesterday. If the SP rises 2% today, the LTHs enjoy the same notional gain as all other holders. The opposite is true if the SP falls (because it is a notional loss). The same applies to dividend payouts. LTHs get the same dividend rate as those who bought yesterday, regardless of how much either paid for the stock. This is because ALL holders of the stock forgo the opportunity put those same funds to alternative use, if they were to sell the stock. So, in all respects, LTHs are indistinguishable from any other holder. This axiom holds good for any reasoned discourse or analysis, and if you don't understand it, any reasoning that flows from your misunderstanding will be flawed.
The term LTH is used to identify "who" the investor is, and their approach towards investing in a particular stock, come hail or shine - no more, no less. It is to be contrasted against traders who buy and sell to make quick gains. Both strategies have a place in the market.
CBA Price at posting:
$161.14 Sentiment: Buy Disclosure: Held
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