Personal Investment Reflection
5 Reasons Why Having The Long-Term View is Vital in Stock Investing
Chris Lee Susanto, Editor in Chief at Re-ThinkWealth
23 March 2018
“If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes” – Warren Buffett
“The single greatest edge an investor can have is a long-term orientation.” – Seth Klarman
The above two quotes are more profound than it looks. Both of them supports the fact that we need to have long-term thinking as stock investors.
Reason #1: If we try to predict which direction the stock price is going to move over the next few weeks or months, that endeavor would most likely end in despair. Why? Think black swan events and think the irrationality of humans that will swing the stock prices up and down in the short term.
Reason #2: Lessening of buying and selling equals to lesser cost of investing through the commission we pay to our broker/platform for executing our buy and sell trade.
Reason #3: A stock equals to a part ownership in a company. And having a long-term mindset complements with the truth that when we buy stocks, we are essentially buying a part ownership in the business. So when we think long-term, we will not be too influenced by the short-term price fluctuations.
Reason #4: Echoing reason #3, price is what we pay and value is what we get. Price and value can diverge over a long period of time. And one being right may still lose money in the stock market – as long as the market never realizes the true value of the business and reflect it in the stock price. So having a long-term mindset teaches us to be patient because price and value will take time to converge – meanwhile, do not be too affected by short-term price movements – as long as the business value is still intact.
Reason #5: Compounding. Warren Buffett often said that there are 3 reasons why he got so rich: being able to live in America, good genes so that he can live long and lastly compound interest. Thinking long-term help us to see that the goal for all of us is truly leveraging on compound interest in order to be rich. Remember, 99% of Warren Buffett’s net worth is achieved after his 50th birthday. Think about that for a second.
Disclaimer: The information provided is for general information purposes only and is not intended to be a personalized investment or financial advice.
Important: Please read our full disclaimer.
Thank you for your time reading.
If you liked this article, please share it | I write for my readers, you. It would mean a lot to me if others read this as well. 🙂
Yesterday’s was Qualcomm’s release of its quarter 1 2018 results. You can view its SEC filing here. It is for the quarterly period ended March 25, 2018. A short background, Qualcomm is simply the company behind most of the smartphones that we are using – in terms of the chips or you can call it, the “brain” […]
The stock hit fresh near 13 year low despite the company doing pretty well during the earnings call on 28 March 2018. It closes at 10.39% down. It is not an easy day for any GameStop holders (except the short sellers), from my end, I am thinking where I could have gone wrong – or is the market wrong. I am more than willing to […]
Despite the increase in sales and the beat in earnings from analyst estimates, their profits are still down 11.4% year on year basis on the adjusted diluted EPS portion (from $3.77 to $3.34). However, $3.34 is near the top of the management guidance for FY2017 – and the focus on improving the trade awareness where […]
As of the market close on 11 January 2018 at $19.96, I am at a 7.81% paper gain excluding of realized gains I received via dividends and options premium. And GameStop consists of 30.80% of my portfolio – second on the list – with the first being Qualcomm at 40.60% of my portfolio. Naturally, going down to GameStop stores in New […]
Yesterday’s was Qualcomm’s release of its quarter 1 2018 results. You can view its SEC filing here. It is for the quarterly period ended March 25, 2018. A short background, Qualcomm is simply the company behind most of the smartphones that we are using – in terms of the chips or you can call it, the “brain” […]
The stock hit fresh near 13 year low despite the company doing pretty well during the earnings call on 28 March 2018. It closes at 10.39% down. It is not an easy day for any GameStop holders (except the short sellers), from my end, I am thinking where I could have gone wrong – or is the market wrong. I am more than willing to […]
Despite the increase in sales and the beat in earnings from analyst estimates, their profits are still down 11.4% year on year basis on the adjusted diluted EPS portion (from $3.77 to $3.34). However, $3.34 is near the top of the management guidance for FY2017 – and the focus on improving the trade awareness where […]
As of the market close on 11 January 2018 at $19.96, I am at a 7.81% paper gain excluding of realized gains I received via dividends and options premium. And GameStop consists of 30.80% of my portfolio – second on the list – with the first being Qualcomm at 40.60% of my portfolio. Naturally, going down to GameStop stores in New […]
