Long-Term Investing: The Key To Success!

Everyone involved in the stock market game will agree that investing benefits only if it is done for the long term. However, on the practical side, very few investors display the patience required for long-term investing. Yogesh Supekar discusses the merits of investing for the long term while Shreya Chaware highlights the rewards one can expect to receive by staying invested for such extended durations.

- Yogesh Supekar & Shreya Chaware

The stock market is a funny game where we see investors bullish when the prices are soaring (expensive) and usually the same pack of investors get bearish when the stock prices are trending downwards (cheap). Says Sachin Rane, a mutual fund advisor and distributor from a Tier II city: “Recently when the stock market was trending upwards, all investors wanted to buy Poonawalla Fincorp when it was available at about Rs 302 per share. However, now that the markets have corrected and the sentiment has reversed, the same stock is available at about Rs 240 per share which is 20 per cent cheaper from its 52-week highs. Logically, one should be buying the product if you are getting it cheaper, right? But that is not how things work in the stock market.

Indeed, the concept of ‘right time to buy’ is one of the biggest scandals the stock markets have ever seen. The truth is there is never a right time to buy unless one is willing to wait for the ‘right amount of time’ in the markets. However, most investors are always obsessed with timing the market. It is a known fact that most investors are short-sighted when it comes to the stock market game which is designed for winning in the long run. It is only after an investor spends years in the stock market that he or she realises the merits of long-term investing. It may not be completely wrong to say that most investors are forced to be long-term investors just because their short-term positions have gone against them and that they failed to apply stop losses in their positions.