Login | December 23, 2025
The long and short of it
THE MOTLEY FOOL
Ask the Fool
Published: December 23, 2025
Q: What does being "long" or "short" a stock mean? -- N.N., Manhattan, Kansas
A: Most of us are "long" on our stocks. That means we've bought expecting the shares to increase in value. When someone "shorts" a stock, they're betting it will fall in value -- so they borrow shares and sell them, hoping to buy replacement shares (to repay the loan) at a lower price later.
Shorting is a strange, but legal, thing to do. There are good reasons not to short stocks, though. For one thing, the company's management will be working against you, to make the business succeed. Even if a stock does lose much of its value, it can take a long time to do so.
Q: I read that electric vehicle (EV) maker Lucid executed a "reverse split." Is that good? -- D.Y., Clinton, Mississippi
A: Reverse splits are generally red flags. Consider a regular stock split, say one that splits 2-for-1. If you owned 100 shares trading at $50 apiece, after the split you'd own 200 shares trading at around $25. The total value would be around $5,000 both before and after the split.
Lucid Group had a 1-for-10 reverse split. If you'd owned 100 shares pre-split, when they were trading for around $2 apiece (total value: $200), you'd end up with just 10 shares post-split, with the share price adjusted proportionately to $20 (total value: $200).
The fact that Lucid's shares fell considerably below $5 each means the company was deep in penny-stock territory, and penny stocks tend to be risky. Lucid was and is facing challenges, as it has been delivering a lot fewer of its EVs than expected and is not yet profitable.
Fool's School
Warren Buffett's "Secret Sauce"
Dividend-paying stocks are often underappreciated, as many investors chase high-flying growth stocks instead of income-producing investments. But some growth stocks also pay meaningful dividends, offering a win-win scenario.
Consider Warren Buffett, who has one of the best investing records around: He grew the value of his company, Berkshire Hathaway, by an average of close to 20% each year for a whopping 60 years. He achieved that in large part by investing in dividend-paying stocks.
A great example is Coca-Cola. As Buffett noted in his 2022 letter to shareholders, in a section titled "The Secret Sauce," Berkshire Hathaway had spent $1.3 billion on shares of Coke by 1994 and collected $75 million in dividends from it that year. As with most healthy and growing income stocks, that payout was increased over time, and "by 2022, the dividend had increased to $704 million."
Buffett added: "American Express is much the same story. Berkshire's purchases of Amex were essentially completed in 1995 and, coincidentally, also cost $1.3 billion. Annual dividends received from this investment have grown from $41 million to $302 million. Those checks, too, seem highly likely to increase."
That's how Buffett and Berkshire are profiting from long-term investments in dividend payers. Even companies held for shorter periods can be boffo dividend producers. In his 2020 letter to shareholders, Buffett noted that the company had bought about 1 billion shares of Apple (a growth stock!) between 2016 and 2018, and that it had since collected around $775 million in dividend income from Apple -- annually.
Don't discount income stocks: They can be your secret sauce, too. You might seek healthy and growing dividend payers on your own. Or you could take the simpler (but also powerful) route of investing in one or more dividend-focused exchange-traded funds (ETFs), such as the Schwab U.S. Dividend Equity ETF (SCHD), the Fidelity High Dividend ETF (FDVV) or the Vanguard High Dividend Yield ETF (VYM).
For best long-term results, consider reinvesting your dividend dollars in additional shares of stock.
My Dumbest Investment
Sold Intuitive Surgical Too Soon
My most regrettable investing move was selling my 200 shares of Intuitive Surgical at $35 per share. -- S.H., online
The Fool responds: We don't know exactly when you bought and at what price, so we don't know how much in potential gains you might have missed out on, but it could have been a lot. Intuitive Surgical, the leader in robotic surgical systems with a recent market value of $195 billion, has averaged annual gains of more than 25% over the past decade and more than 21% over the past 15 years. That's enough to turn a $10,000 investment into $93,100 or $174,500, respectively.
Your regret is a common one, because most investors have regretted selling one or more terrific performers way too early -- or not buying into them at all. (We hope you netted some profit on your sale.)
In the future, before selling a stock, you might think about how confident you are in its growth prospects. If you're on the fence about it, you might compromise and sell only a portion of your shares.
Intuitive Surgical is still growing, with its second-quarter revenue up 21% year over year. With a recent price-to-earnings (P/E) ratio of 73, its shares don't look cheap, but then they rarely do.
(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@fool.com.)
Foolish Trivia
Name That Company
I trace my roots back to 1902, when my founders launched a mining and manufacturing business in Minnesota. Over the years, my offerings have included masking and cellophane tape, recording tape, surgical drapes and synthetic grass. I declared my first dividend in 1916 and have been paying dividends regularly ever since. Now, with a recent market value of more than $90 billion, I'm an industrial giant, cranking out some 55,000 products used in homes, businesses and elsewhere. I'm known for being innovative, and about a third of my revenue is from products launched within the past five years. Who am I?
Last Week's Trivia Answer
I trace my roots back to 1893, when the Waltham Chemical Company, a predecessor of a business I bought in 2010, was founded. A business that I bought in 1964, Orkin, began in 1901 when its founder started selling rat poison door to door. I was incorporated in 1948 and went public in 1968. Today, based in Atlanta and with a recent market value near $27 billion, I'm a major pest-control specialist serving nearly 3 million residential and business customers across the world. I've averaged stock-price gains of 18% per year over the past decade. Who am I? (Answer: Rollins)
The Motley Fool Take
Growth Potential and Dividend Yield
Danish pharma company Novo Nordisk (NYSE: NVO) is a big player in the GLP-1 drug market, with Wegovy (for weight loss) and Ozempic (for diabetes) being two core products that generate billions of dollars in revenue for its business.
Its share price crashed in late July after the company lowered its projections for the fiscal year, as growth was a bit slower than expected. And Novo Nordisk has been fighting a losing battle to keep knockoff versions of its popular drugs off the market. These two headwinds have resulted in the stock price falling by half over the past year.
There's plenty of reason to remain bullish on Novo Nordisk. Even with the challenges it has faced recently, the company boasts a strong pipeline of products in development, solid revenue growth and promising growth prospects in diabetes treatment and weight management. In the first half of the year, total revenue rose 16% year over year.
The health care stock recently traded at a forward-looking price-to-earnings (P/E) ratio of only 14, which makes it look like an excellent deal given its long-term growth potential. While it's not having a great year, Novo Nordisk is likely to rebound. Patient long-term believers can enjoy a dividend recently yielding 3.2% while they wait. (The Motley Fool recommends Novo Nordisk.)
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