CLOSE ENCOUNTER WITH THE MANY KINDS
WTF ! CLOSE ENCOUNTER WITH THE LONG TERM INVESTOR
Is there such thing as long term investor ? Wat fak is that ? Anyone here is long term investor? Care to clarify ?
This is my encounter with the long term investor,
No.1 .. The sucker buy a stock, the price drop and got stuck. This is the most common long term investor that i encounter. We might wonder why not this sucker just sell off the stock. Reason is simple. Usually this sucker has history of buying at RM 1.00 then cut loss at 50 sen .. and after selling, the stock shoot all the way to RM 2.00 ... HAHAHAHAHAH ... so, on second round, the sucker will buy at RM 2.00, just to watch the price drop all the way to 50 sen again, but this time the sucker had learnt his lesson ... and learn his lesson well. He also learn about the benefit of averaging down. So, he not onli refuse to sell, but buy more at 50 sen. And of course, as we know, all faery tail has happi ending. After adding more share at 50 sen, the share price drop to 10 sen instead. He has to sell off to salvage watever little he can get back, and history does repeat itself. The share price shoot up to RM 2.00 again. I know i did mention about faery tail has happi ending ... but, we DUN"T live in faery world !
No. 2 .. I also encounter with another group which really hold long term. They show me their portfolio. All are blue chip counters. I ask their stori ... surprisingly, they gave the same stori as no. 1 above, except that they survive after selling at big loss at 10 sen, and now swear to only buy blue chip stocks. Blue chip stock "usually" go down very slowly, before reaching cut loss price, it start to go up again, and before it reach take profit price, it start to go down again. Wat happen when the price never really reach downside and upside price ? Your neck will start to become long, that's is wat goin to happen. Now, we know why they call themself long term investor, not because of the blue chip counters ... but because of their long neck.
No.3 .. the third type that i met, is really getting on my nerve. They are the type that always scold people for selling off any shares. U sell PMCorp at 31 sen, he will scold u for not being long term investor. U sell LCTH at 36 sen, he will scold u again. He always come out with his granpa stori about after buying, cannot sell. Of course his granpa stori onli apply to other people but not himself. Everyone are not allowed to sell, except him. When he sell, he will come out with different granpa stori about after buy, can sell. And, no ... at the end, the fakker is not successful in his investing too.
No. 4 .. is the long term view investor. They can predict or even estimate the earning or growth in earning of any company far into the future, even longer than the company financial executive himself. I saw how they calculate the earning. Very impressive accounting stuff with very complex financial software. They just key in watever growth they wan and woila, the computer will straight away come out with all the earning. U think the company is excellent (excellent mean, u own a lot of the company shares), than u key in 100% growth every year for 10 to 20 years. If u think the company is neutral ( neutral mean u dun own any shares of the company) than u key in 1-2% growth. And if u think the company is bad (bad mean, u dun own the share, but someone u hate own a lot) than u key in negative 50% instead.
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4 people like this. Showing 20 of 20 comments
No 1 to 3 are the same.
When a company price dropped after the purchase, you should reevaluate your buying decision and examine if the business has fundamentally changed, if nothing has changed, there is no worry to sell it out just because other sellers are foolish. In saying that, always buy with margin of safety so if the fundamental has changed, you don't lose that much.
Blue chip stocks are the same, you only buy when the price is cheap or fair value. Again, blue chip you don't wanna expect to make 100-200% in 2-3 years but more like 10-25% each year. I don't see why buying blue chip stocks can be long neck, as long the business is doing well. The only target price/take profit price for all stocks are when the price is way overvalued.
For No 4, estimation is always a good start but i don't see the point of projecting to 10 years or above because no one can estimate that accurately unless the business is so boring and stable. However quantitative estimation should always accompanied by qualitative estimation. The more you understand a business, the more accurate your quantitative estimation will be, and also more conservative.
I like to think I am a long-term investor, because truth be told, I don't think I can be a short term investor, I am not that smart. You see short term investor needs a lot of luck to succeed. Why?
Short Term trader, 2 things where the odds are against them. 1. Transaction fees 2. Player vs House
1. Many short term trader ignore buy and sell transaction fees as long they are making a profit, the fees are negligible. That can be true if you are going to invest just one year, if you going to invest for the next 10-20 years, given that if both of us have the same level of skills and luck, you will not beat a buy and hold investor, period.
2. Short term trading is very close to gambling in the casino, you are the player, the market is the casino. Regression towards the mean, the odds are staked against you over the long term to beat the house. There is always the exception, just like there are the few that successfully make money from horse betting. Those are the ones that are disciplined enough to only make the swing when necessary. If you have such a discipline, then maybe you can make money in the long term.
However did you notice the conflicting thing? If you have the discipline to make very few investment, you wouldn't have become a short term trader in the first place. The very reason that everyone becomes a short term traders is because they believe frequent trading can make more money than just buy and hold method.
Excerpt from Art of Stock Picking by Charlie Munger:
"I think the goal of amateurs who are starting out, especially if they have a small portfolio, should be to learn how to invest successfully, and not how to make money.....And the oÂne thing that all those winning betters in the whole history of people who've beaten the pari-mutuel system have is quite simple. They bet very seldom.
It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it ‑ who look and sift the world for a mispriced be that they can occasionally find oÂne.
And the wise oÂnes bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don't. It's just that simple."
2014-09-21 14:34
leno leno leno ... u are just so extraordinarily witty !!!!!! i have close encounter with the cutest n panlai cat in the share market :) :)
2014-09-21 14:48
third Para...as you say and say it well and i like it " Unless the Business is Boring and stable."
Looking at all Top Priced companies in Bursa, all Boring and Stable. Nothing exciting at all.
2014-09-21 14:53
Yeo, Some medium sized company with Boring and stable Business will be Top Priced one day ya.
2014-09-21 14:56
Buy at low tide when almost everyone is negative or too scared to buy
Sell at high tide when everyone wants to buy
Just focus buying on turnaround stocks or stocks with price way below NTA, cash backing per share but buy at low tide prices as low tide price gives you the highest margin of safety.
2014-09-21 14:56
Everyone is long term investor. Even contra player can call themself long term investor. So long as you are happy and that matters. You can call yourself the most clever investor as long as your are happy.
2014-09-21 15:50
Better earn profits over long term than become an unwilling long term investor with no profits ..hahaha
2014-09-21 17:22
This panlai Leno make sense! Cat with 10 lifes has no problem making money! 9 thumbs up! Keep writing!
2014-09-22 03:37
The meaning of long term investor is to live as long life as mr buffet, ha,ha!
2014-09-22 08:47
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I am a long term investor.
I buy and hold my shares for an extended period. I have held some counters for over 15 years, although nowadays, (as i have become more active), i now normally look at a 3-5 year horizon.
I am a bottom feeder.
I will only look at shares when i think the market is dropping and the shares are near their 52 week lows and if an opportunity presents itself, i will buy in.
Please note, that i do extensive research and make sure that those counters are ones that i will be comfortable holding for a long period.
I don't listen to rumors nor do i play "active" counters.
I also only trade on a cash basis.
I do not trade on a daily basis and have ever not even looked at the stock market for more than a year.
The majority of the shares i own are blue chips or dividend paying stocks, although, i do hold a few "speculative" counters.
Have i made lost money? Yes!
Have i made money? Yes!
Everyone has their own strategy for investing.
No one is right or wrong.
We all reap the benefits, or suffer the consequences, of our own decisions!
2014-09-21 11:57