Buy a Stock as Long-term Investment or Short-term Gamble

Stock, a long-term investment or a short-term gamble

 

With certain types of investments in the stock market, I lose money. With others I gain money. Often I invest in stock long-term. Sometimes I try to make a short-term killing. The long-term approach works. My short-term attempts only make me humble.

When you follow the economic news, it is easy to form an opinion if we are in a bull or bear market and if stocks should gain or fall. In the short-term stocks do not do always what they should do. At that moment, you might see an opportunity to make some short-term gains. Because the stock market is moving in a different direction than it “should be” and will soon correct. Markets should be rational, isn’t it?

Playing these short-term “opportunities” is not working out for me most of the time. Why I still fall for it occasionally? Probably I need that lesson now and then that I am not smarter than the market; just putting me with both feet back on earth. What I have learned is to limit my losses. I keep my short-term bets rather small.


The Long-term Stock Approach


When I take a longer term approach, it works out much better.

There are two different “long-terms” here:


  1. The length of the period after which you measure your gains.

  2. The length of the period that you aim to hold on to your investments.


Having a real long-term investment approach covers both aspects.

As a long-term stock investor, you aim to make great returns over a period of many years, maybe even decades. You do not aim to be much wealthier in a few months time.

And as a long-term stock investor, you aim to keep your investments for a period of multiple years. Of course, there are times that you have to revise your buying decision and sell your holding much quicker than originally thought.

Investing in funds and stock with a long-term perspective does not mean to be rigid, inflexible and blind to reality. You can change your mind. The intention counts.


Solid Investment Strategy


The only way to make a good long-term return on your investments in the stock market is to have a solid strategy… and stick to it (read here more about how to avoid impulsive investments).

Remember that a stock market investment strategy is a personal choice. The strategy has to match your skills, available time and ability to control your emotions.

Short-term tactics to make money in the stock market are hard to find. And anybody who has discovered one will not tell you.

It is easier to find successful long-term stock market strategies. The users of these strategies do not mind sharing them. Only people who are dedicated to them over a period of many years can make them work. Sharing these strategies does not reduce their returns.



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