Updated: May 6, 2021
90% of the investors struggle to keep their overall investment portfolio in the positive. Despite positioning themselves being a value investor, most of their stock holdings ranges between 20 and 40 stocks and some even have more, beyond a number of stocks they could manage. As observed, more than 50% of their holdings are in the red even in a bull market.
When do most of these investor call themselves "I am a value investor"?
After they have invested in their favourite stock(s), after awhile, when they started to depreciate by about 20%, then they begin to evaluate these stocks of it worth in holding it. Investor: "It seems like a good a stock(s) as it pays dividend and it's prospect seems alright. I think I will hold-on to these stocks because I am a value investor."
What could be their problem?
Most investors do not have a plan on the stock(s) they intend to invest, how long this investment will take to see it yielding result. They mostly made their investment purchases with a single minded purpose, that is to make money and missing the most fun part being a long term investor - TWC "to Test, to Wait and to Accumulate.
How should we plan?
Knowing to invest right for your trade type, it is the first step in achieving a fulfilling investment journey.
Who are you in the above 4 quadrants? Are you aware if you classified yourself as a "Long term investor", each investment you enter into, give them a reasonable amount of time, at least 3 years or more to see if they can live it up to their objectives set according to their prospectus.
If they proven themselves after some time, you may consider to accumulate more of it through another investment tranche. As an investor, the mindset is to accumulated more of it as we see value in them as others have not.
Holding period of at least 3 years and more for "Long term investor", why?
For example a group of young and passionate tech entrepreneur invented a product and wanted to have a start-up. You know them for awhile and you believe in their their product and also their character that they will stay through with the mission they have set out to do. If you were to invest into this start-up, how much time will you give them?
The time I am referring to, it is not about for you to take profit or tho sell back your shares, but seeing the vision set come to pass and you would like to invest into a second phase, expecting for a exponential growth.
I have asked this questions in different classes, many have given me a consistent answer of about 3 years and more,
Therefore, if you were to be a long term investor, be mindful of the waiting time. It should take about at least three years to see some results. Are you ready for that? If this is not acceptable period to wait upon, perhaps you should consider to position yourself as a short term investor instead.
Investment tools for "Long term investor"
Different investment tools are meant for different investment purposes. For long term investors, go for asset class type. How to identify if that tool is classified as asset class type? If there is an intrinsic value tied to that investment tool, in my opinion, it can be classified as an asset type.