Buy something you’d be happy to hold for 10 years
The exact quote by Warren Buffett is
“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years”. Mr Buffett is no doubt the best long term investor in the stock market and he is my inspiration when it comes to long term investment. For me, long term investment means a time frame of more than 5 years.
Why do I like long term investment?
1. Buying a stock of a company is owning a part of the company. When you think like a owner, you focus on the business and not the stock price. It is therefore critical to think long term. You do not sell your company when it does not do well in a week, you would try to make it work. It is the same in long term investment. Once you have selected the company to invest, you stick to the plan unless the fundamentals change.
2. I like the process of selecting and researching the companies to invest in. As a long term investor, in order to have a peace of mind when you invest, you need to do your due diligence. As a start, you need to know the following:
* What does the company do?
* How do they earn their revenue?
* How are their financials? For eg. Look at their financial ratios, price to earning, price to sales, free cash flow, debt level.
* Who are the management? Can they execute the plan and the vision?
* Who are their competitors?
I make a checklist and score the shortlisted companies. If they make the score, I will start a position in the company.
3. Long term investment eliminates emotions roller coaster and sleepless night.
In the stock market, there can be a lot of noise. The stock price goes up and down. By focusing on the business, I can take away the emotions roller coaster.
That does not means that I just ignore my investment. I would keep myself up to date on the company development during the quarterly results update. During the quarterly update, pay attention to the financial results and especially the CEO update. Reading the transcript is important.
4. Long term investment can bring massive return.Everyone dream to have a 100 bagger. Only long term investment can bring a 100 bagger. If we let go of a winner too early, we would not be able to have a 100 bagger.
$Amazon (AMZN.US)$ , $Berkshire Hathaway-A (BRK.A.US)$ , $Apple (AAPL.US)$
So does it means that long term investment is a sure win?
Unfortunately no. All investment carry risk. There are cases whereby the company did not keep up with the times and get replaced. For eg. Blockbuster. In those cases, the investment can go to zero no matter how long you hold it. So we need to do risk management. For me, that is portfolio allocation and dollar cost averaging.
Ultimately, all roads lead to Rome. Find the investment strategy that you are most comfortable with so that you can strive from it. It can be long term investment, day trade or options trading. There are many experts in the Moomoo community that you can learn from for the different strategies.
@Mcsnacks H Tupack @HopeAlways @Mars Mooo
May the market be with you.
Merry Christmas 🎄!
“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years”. Mr Buffett is no doubt the best long term investor in the stock market and he is my inspiration when it comes to long term investment. For me, long term investment means a time frame of more than 5 years.
Why do I like long term investment?
1. Buying a stock of a company is owning a part of the company. When you think like a owner, you focus on the business and not the stock price. It is therefore critical to think long term. You do not sell your company when it does not do well in a week, you would try to make it work. It is the same in long term investment. Once you have selected the company to invest, you stick to the plan unless the fundamentals change.
2. I like the process of selecting and researching the companies to invest in. As a long term investor, in order to have a peace of mind when you invest, you need to do your due diligence. As a start, you need to know the following:
* What does the company do?
* How do they earn their revenue?
* How are their financials? For eg. Look at their financial ratios, price to earning, price to sales, free cash flow, debt level.
* Who are the management? Can they execute the plan and the vision?
* Who are their competitors?
I make a checklist and score the shortlisted companies. If they make the score, I will start a position in the company.
3. Long term investment eliminates emotions roller coaster and sleepless night.
In the stock market, there can be a lot of noise. The stock price goes up and down. By focusing on the business, I can take away the emotions roller coaster.
That does not means that I just ignore my investment. I would keep myself up to date on the company development during the quarterly results update. During the quarterly update, pay attention to the financial results and especially the CEO update. Reading the transcript is important.
4. Long term investment can bring massive return.Everyone dream to have a 100 bagger. Only long term investment can bring a 100 bagger. If we let go of a winner too early, we would not be able to have a 100 bagger.
$Amazon (AMZN.US)$ , $Berkshire Hathaway-A (BRK.A.US)$ , $Apple (AAPL.US)$
So does it means that long term investment is a sure win?
Unfortunately no. All investment carry risk. There are cases whereby the company did not keep up with the times and get replaced. For eg. Blockbuster. In those cases, the investment can go to zero no matter how long you hold it. So we need to do risk management. For me, that is portfolio allocation and dollar cost averaging.
Ultimately, all roads lead to Rome. Find the investment strategy that you are most comfortable with so that you can strive from it. It can be long term investment, day trade or options trading. There are many experts in the Moomoo community that you can learn from for the different strategies.
@Mcsnacks H Tupack @HopeAlways @Mars Mooo
May the market be with you.
Merry Christmas 🎄!
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Mars Mooo : @Panda2102, Merry Christmas, my friend.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
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Thanks for your sharing.
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