Eternal Conflict: Short-term vs Long-term

long term investing

The other day I was speaking with a senior academician who teaches finance in a leading B-school and also plies his skills in the stock market. He proclaims to be a long-term investor whose mantra is: buy and forget. He says he is immune to the everyday insanity that plagues so many investors.

After skirting around politics and sports, I got down to brass-tacks and asked him to share a tip or two behind his success in stocks and career per se.

He counter-questioned me, “what do you like – a sprint or an ultra-marathon?” I said I try to be an ultra-marathoner, but I get distracted too often.

He replied, if you want to be a long-term investor, the first thing you need to is shut out all the noise. Sever all the distractions – financial news, app, twitter experts and even broker friends – who can make you think otherwise.

He told me that you would never be able to reason with someone who is gunning only for short-term goals. The perspective of a long-term investor can’t ever align with that of a day trader or a speculator or that of someone who buys today only to sell tomorrow for a few bucks in profit.

A long-term view is like a steel armour. It’s like an immunity dose that protects you from all daily madness and noise.

It’s like that blue bucket story, he said.

You drop one drop of blue hue in a bucket of water and nothing changes. You add one drop daily and still, after a week, nothing changes. You continue for a month, you see a change in the color of water. You continue for a few months more and the water is distinctly blue.

The same analogy applies to a long-term investing, too. You have to do your thing daily and not expect instant results because they won’t come.


Published by Amitesh Jasrotia

Dreamer. Bibliophile of sorts. I love to read business books and research papers. Taking notes is a habit. Self-improvement is an obsession. Benjamin Graham's 1949 edition of 'The Intelligent Investor' is a coveted possession.

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