Motley Fool: Just do it?

Nike (NYSE: NKE) is the leading brand of athletic apparel in the world, but the company is going through a rough time, with slumping sales sending the stock down to multiyear lows.

The recent dip in sales is uncharacteristic – the athletic apparel industry has been growing for years, and Nike has been a resilient brand. Nike can return to growth, but it will take time to turn a company of this size around. Revenue fell again in the fiscal third quarter (reported in March), down 9% year over year; revenue is likely to be down in the fourth quarter, too, in part due to tariff-related factors and other economic challenges.

Problem areas have included classic footwear franchises like Air Force 1 and the Jordan brand of sportswear. Demand has fallen off for these lifestyle products, leaving Nike with too much inventory. This can hurt earnings, as the company is forced to discount merchandise to sell it.

Meanwhile, Nike is seeing growing demand for performance products. Management is aiming to bring down sales of classic franchises to a lower percentage of its footwear business in fiscal 2026. This should lay the foundation for a return to growth, though it could take a few years.

In the meantime, patient believers can collect its dividend, recently yielding 2.6%, while they wait. (The Motley Fool owns shares of and recommends Nike.)

Ask the Fool

Q. How risky are bonds? – C.L., Warren, Rhode Island

A. Bonds are typically regarded as safer investments than stocks and are often recommended to diversify a portfolio. Still, much depends on the particular bonds and stocks in question. Like stocks, bonds carry some risks.

For example, there’s the risk of default. Bonds backed by the United States government are generally seen as least risky, while bonds with poor credit ratings are considered “junk bonds,” with much higher risk. (You can look up credit ratings from agencies such as S&P Global, Moody’s and Fitch.)

There’s also interest rate risk: If rates rise, bond prices usually fall. And inflation risk: If you’re promised, say, a 3% interest rate on a bond but inflation is 5%, your purchasing power shrinks. Moreover, if you want to sell a bond and there’s little interest from buyers, you have “liquidity risk” and may have to sell at a discount. There are some other risks to consider, as well.

Q. What’s Keynesian economics? – L.N., Erie, Colorado

A. It’s an economic theory named for John Maynard Keynes, who suggested that government intervention is needed, especially during recessions, to stimulate demand and try to stabilize the economy. Measures to spur the economy include tax cuts and government spending, which can boost consumer spending and reduce unemployment.

Not everyone is on board with Keynesian economics, though. Some, for example, favor keeping the government out of the economy, letting businesses thrive or falter in accordance with the laws of supply and demand.

There’s much more to learn about these and other economic schools of thought if you’re interested. Try searching online for “economic theories” or “Keynesian.”

My smartest investment

My smartest investment? Well, in 1993, I bought 200 shares of Royal Caribbean Cruises for $18 apiece. I’d earlier bought into Carnival Cruise Lines and, stupidly, had put in a stop-loss order that got triggered when the shares fell a bit, resulting in my shares being sold automatically. I intentionally didn’t use a stop-loss order with my Royal Caribbean shares. They paid a nice dividend and eventually split 2-for-1 (turning my 200 shares into 400, with a proportionately lower price and the same total value).

Not being a player, I just held on, never tempted to sell some shares to cover my original cost. The stock kept rising and then plunged over 40% during the first year of the COVID-19 pandemic. It has since risen to an all-time high. Over the past 32 years, the dividends have paid for my stock purchase three times over, and the shares are currently selling for many times my original cost per share! Good thing I’m a long-term investor and not a speculator. I’ll continue to hold the stock until I die. – G.B., via email

The Fool responds: Bravo! Buying and holding growing companies you believe in can really pay off. You were smart not to automatically sell when the pandemic sent lots of travel-related stocks down.

(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@fool.com.)