Long-term investment: why? And how?
Many people claim that they're "in it for the long term", but in reality, most people are momentum traders at heart. People panic when the things are red, and do impulsive things. People also FOMO in when things are green, and end up regretting their decisions. How many of you truly hold long-term investments?
To me, a long-term investment in a company is a company where you can say: "I like what this company does, I believe in this company, and I believe its price will increase in the long run." Very extensive due diligence is required to come to this conclusion, and quite frankly, there aren't many companies that make the cut.
There's so much uncertainty in the stock market. For example, $Alibaba(BABA.US$ is a monster when it comes to cash flows and revenue, yet it has fallen by half in months over many developments that even the smartest value investors couldn't have predicted.
However, the idea of long-term investment is simple - no matter what the price action is, you're going to stick with what you believe in, maybe add on dips and sell puts to grow your position because this is the position you're going to hold for at least 10 years. This will be the money that pays for your housing, your future business, your retirement etc.
A long-term investment is one that requires the most detailed due diligence and fundamental analysis. Many choose $SPDR S&P 500 ETF(SPY.US$ or $Invesco QQQ Trust(QQQ.US$ as safe bets, as they have been proven to perform well over a long period of time. I concur with this and hold a large position myself. Such long-term investments are safer as you aren't placing bets on the fate of one company, but rather a basket of proven performers.
Some believe that $Apple(AAPL.US$ and $Tesla(TSLA.US$ are worthy long-term investments as well. It is definitely debatable, and honestly I do see a case for them. Apple aims to launch a self-driving electric vehicle by 2025 - a massive area to tap into. Elon has done wonders with Tesla and doesn't seem to be stopping. It is without a question that these are great companies that will do well in the long run, but what's concerning is the current valuation - are today's prices justified? The stock market has been in the biggest bull run since the shock drop due to Covid-19, which frankly wasn't as big of a market crash as what we've seen in the past. The prices we pay for companies today leave a lot to be questioned, and I'm not saying that these companies are overvalued, but that is just a possibility that definitely needs to be considered, for all valuations across the board today.
It will take time to find the right one, but I do believe that every investor should have a decent amount of money allocated to long-term investments. These are the investments which your future self will thank you for.
To me, a long-term investment in a company is a company where you can say: "I like what this company does, I believe in this company, and I believe its price will increase in the long run." Very extensive due diligence is required to come to this conclusion, and quite frankly, there aren't many companies that make the cut.
There's so much uncertainty in the stock market. For example, $Alibaba(BABA.US$ is a monster when it comes to cash flows and revenue, yet it has fallen by half in months over many developments that even the smartest value investors couldn't have predicted.
However, the idea of long-term investment is simple - no matter what the price action is, you're going to stick with what you believe in, maybe add on dips and sell puts to grow your position because this is the position you're going to hold for at least 10 years. This will be the money that pays for your housing, your future business, your retirement etc.
A long-term investment is one that requires the most detailed due diligence and fundamental analysis. Many choose $SPDR S&P 500 ETF(SPY.US$ or $Invesco QQQ Trust(QQQ.US$ as safe bets, as they have been proven to perform well over a long period of time. I concur with this and hold a large position myself. Such long-term investments are safer as you aren't placing bets on the fate of one company, but rather a basket of proven performers.
Some believe that $Apple(AAPL.US$ and $Tesla(TSLA.US$ are worthy long-term investments as well. It is definitely debatable, and honestly I do see a case for them. Apple aims to launch a self-driving electric vehicle by 2025 - a massive area to tap into. Elon has done wonders with Tesla and doesn't seem to be stopping. It is without a question that these are great companies that will do well in the long run, but what's concerning is the current valuation - are today's prices justified? The stock market has been in the biggest bull run since the shock drop due to Covid-19, which frankly wasn't as big of a market crash as what we've seen in the past. The prices we pay for companies today leave a lot to be questioned, and I'm not saying that these companies are overvalued, but that is just a possibility that definitely needs to be considered, for all valuations across the board today.
It will take time to find the right one, but I do believe that every investor should have a decent amount of money allocated to long-term investments. These are the investments which your future self will thank you for.
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creative Gerbil : Well said actually. Anyways what’s your prediction of BABA by end of year?
alaricOP creative Gerbil: Tough to say, especially with delisting risks. If the FUD regarding delisting blows over, I think this goes back to $180s at least
Mittchell : $Alibaba (BABA.US)$ we will see this back over $200.
alaricOP Mittchell: Let's hope so