Ask this question to people across different spectrum and you will get as many answers as there are spectrums.
- Conservatives will tell you stock market is nothing short of gambling. It demonstrates lack of understanding what stock market really means.
- Broker will tell you buy today, sell tomorrow. It shows what is the motivation; jacking up transactions and fees. Holding for more than few days is not in his interest.
- I can go on an on like this …. but you get the point. Right?
We all want to succeed in making some good money, some quick money, and/or some money. It is my belief that most of the individuals will lose money in stock market over their lifetime. Whether we admit it publicly or not, it is a reality. I do not doubt that people sincerely want to succeed at investing, but the only issue is they do not know how. So they try to follow something that appears to be succeeding. A fund manager or business honcho mentions some stocks or strategy that is doing good in the market, and they jump on board. Only to realize later that they are late to the party. With little drop they jump off and then try to latch on something else, or many times they say, “I am out of the market”. It is a fashion to use market lingo’s.
The way year 2009 bounced, I am sure many of us will get bloated in our ability to time the stock market. Many of us will forget to put 2009 returns in proper perspective.
All this is because people really do not understand what is investing. In last few years, the meaning of investing has drifted from being a part owner of the business to mere a ticker symbol. I can say for sure that more than 90% of the people would not even know what ticker’s business model is. Ask them how this symbol (or the company behind it) makes money and they will be staring like what type of question is that? Since we do not understand that investing is part ownership, we do not believe in letting our investments grow.
We forget that business comes first and stock market comes later. The basic concept of taking ownership in business has taken a back seat. These talking heads, brokers, fund managers, advisors, et. al. have made us believe that buying and selling continuously is investing. Not a single talking head mentions about the fundamental aspect of buying shares to have partial ownership.
In every walks of our daily life, we have a craving to get that stuff “quickly”. There are every few who show discipline and dedication to work hard so that they can achieve their goals. Rest of us look for shortcuts. Generating wealth (and money) from stock market is by no means a shortcut.
In my view, stock market is a sure shot way of generating long term sustainable wealth. The only aspect that you have to understand is, businesses come first, and stock market comes second.
Investing means growing with the businesses you invest in, and this growth takes time. If you invest in good businesses, then it is consistent and sustainable. You will never lose your wealth or invested money. Stock markets are mere reflection of the strength or weakness of the business. And this is why investing is long term.
I used to play soccer for my school, college, and city level club. Our club coach (aka Mondal Bhai) used to say, “I know you all want to win. I also know you have a will power to fight for that win. But I do not need such boys in my team”. It was a shocker to hear that, isn’t it? He continued, “All opposing teams have that will power and desire to win”, “I want boys who have a will and desire to prepare for that win”.
I am willing to prepare for my investing success. How are you preparing to win?
long term investing