Idea No 3 : In Long term every body is dead except Value investors ??

Most investors claim to be long term investors . The definition of long term for lot of investors is till I make desired profit which could  mean a time horizon of as less as few months ( or days) or as high as " TILL I DIE " .

Value investors have different take on  time horizon ..

Superstar investor Warren Buffet is widely quoted as having said, “The best time to sell a stock is…never.”

Value investing is based  on fundamental analysis (balance sheet, income and cash-flow statements, plus some sector economics), . In fact, over short periods of time, such as a few months or even a year, a company’s fundamentals do not  change materially, and hence value does not change materially in short term . 

But the market price quoted for this value can change dramatically leading to dramatic shifts in Margin of Safety or MOAT as defined in Idea No 2 .  Over the short or medium term, the stock market is influenced more by crowd psychology than by fundamentals. Since crowd psychology typically oscillates between euphoria and depression, stocks rarely go from undervalued to merely fairly valued . Momentum usually carries them well into overvalued territory before the next fall.


Hence Warren Buffet philosophy of “never selling” is appealing but not realistic, especially when a value discipline implicitly mandates that you sell a stock once its price has gone above your appraisal of the company’s worth . So while there definitely is an opportunity cost in selling too early, and it is painful to forgo at least some of those “speculative” gains, but as value investors we need to stick to discipline of having high MOS and that should be the basis for " when to buy and when to sell" a stock . 

Market will always give plenty of opportunities to get into and get out of quality stocks and having emotional attachment to any stock is injurious to your portfolio . So I hope your Long term is " Not Till I die "