Poll: Take Your Time
“How long do you aim to hold an investment?”
- 38% Weeks. Let’s see if there’s momentum
- 30% Days. Just to see it twitch
- 22%: Hours. I buy to sell
- 10%: Decades. I’ve a phobia of short-termism
Given the S&P 500’s nine percent average performance every year, making just one percent every month is a sign of real promise. That’s how the Invstr community sets goals, monthly!
Holding stocks for a matter of weeks is also popular, and allows market events to play out and ideas to be validated, without longer-term business cycle blowing things off course.
Some of the very best investments by members of our community have relied upon daily or weekly catalysts. An added challenge, perhaps, is that there’s a relentless pressure to find new ideas without compromising on quality.
Investors usually only hold stocks for a matter of hours if they expect imminent news from a company (perhaps an earnings release), or if they’ve made a miscalculation! You can get a lot done in a small amount of time in markets, but there’s little room for error when short-term trades carry higher commissions and more speculative risk. Fast trades don’t sustainably lead to fast profits, unfortunately. But we’re all guilty of trying it!
Unconcerned with steep price falls, bad quarters, or even bad years, a tenth of the Invstr community is playing the long game. An economic bust will usually test an investors’ character over a ten-year investment period, so it’s important to stay emotionally disciplined and isolated from market “noise.” After thirty short years, the magical effects of compounding will start to kick in.
Picking fast-growing companies that need constant monitoring is probably not a good idea if you plan on falling into a coma for multiple decades. Long-term investing is better practiced with a diversified portfolio that needs little to no active management. After saving huge amounts by avoiding hefty taxes and frequent trading commissions, investors will be able to sleep easy knowing their money is multiplying in the background as they get on with their lives.
The only drawback to the protracted approach to markets, peraps, is that you’ll miss out all the opportunities in-between. As a John Maynard Keynes once said, “in the long run we are all dead!”