What does it mean to be a “long term investor?”
For the most part most people we will come across in this field are trying to quickly grow some extra cash they had on the side. Who am I to judge ? At the end of the day the one who makes the most money / meets all their goals is either the smartest or the the one that has the wisest say in discussions.
But what about you and I? Lol. The ones that have no choice but to be “long term” investors? The ones that don’t have a triple digit portfolio or a 10 bagger (a share that has returned its share price 10 fold) company? Well, we get to talk philosophy and “ooh the Rand is volatile.”
For the largest part being a long term investor entails quietly continuing to buy the shares you love whenever they are on SALE. How? Keeping yourself knowledgeable.
Nothing makes you a lifelong learner like being a shareholder. For starters you have to do your best to get every bit of information that has ever being reported on your new favorite toys (yep your stock picks). That’s the easiest part. Then you press buy and your life is never the same.
For one your eyes dilate (become wider) more than you’ve ever experienced before. You’re tuned into the news like you’ve never been. You drive on the highway wondering what else is owned by a listed company and generally want more and more information on what a great investment you’ve made. You start to realise that the news has been reporting “other people’s stuff” and start to zone out of all the political noise.
Your twitter friends or followees (people you follow) gradually change and you find yourself appreciate facts a lot more now. All this while refreshing your portfolio/browser ever so often. You will do this for a couple of months until you are convinced you have no profit creating powers or realise you have consumed all information and are left with reading blogs on value investing, and momentum investing, oh and that chap “Warren Buffett”. You’ll wonder if you did the “thorough” background research for an “easy” process. Trust me you WILL become an expert on nothing and everything (you’ll basically just know a lot about a lot).
You will start to wonder how it must feel to have “years and years” of experience. How “they” do it. Was it worth it ? I mean they look happy but is that what I really want to be doing the rest of my life? If you’re lucky by now you’ve had a share that made you more money from R1000 or R5000 than you would ever have been given by anyone. So you know this works.
Being a long term investor entails all of the above, and more. But it’s a lot less stressful once you’ve gone through the withdrawal stage of spending all your money and watching news “just because it’s 19:30”. Then you start to realise that all the information starts to repeat itself. That the difference between 5 months doing this and 5 years is just time. And you have to serve yours.
You learn to switch off from the noise and don’t give politicians more value than their entertainments worth. It’s at this point you may get an invite to a financial seminar, or get to listen to a money show and realise that you now tick most of the boxes. There’s something reassuring about the first time you can finally understand what Bruce Whitfield (popular money guy on the wireless) is talking about. Then you’ve arrived, you’re it. But keep going.
Attend at least two AGM’s. Ask a question at one. And now you are invisible. The loop has come full circle and you start to appreciate an annual report. Finally the safety report on page 57 means so much more now that you’ve been to the same AGM as a union representative. You start to see what your 20 cent dividend was competing with to land up in your pocket.
With your chest filled you realise you’ve completed your first investing cycle and now it all repeats itself. Except this time YOU know. Suddenly all the things it takes to be a long term investor seem doable, especially the waiting.
A quick summary of what it takes.
- A lot of random research
- A philosophy of what you deem the important narrative
- A revision of your principles
- A last check with your investing community to see if the price is right
- Then you spend more time engaging with experts and looking for communication solely by management
- The phrase “that’s very interesting” becomes important as you learn to ignore the noise from fact and fact from decision altering information (as evidenced above you make a lot of realisations )
- Attend AGM’s and eat some of your unpaid dividends (yep they serve snacks)
- Tweak here and there and then load up on the confidence of your convictions.
- One day you wake up and your dividends can buy you shares. Whole shares.