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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » What is long term in Share market ?

What is long term in Share market ?

+4
StockGuru
kalum
traderathome
notme
8 posters

Go down  Message [Page 1 of 1]

1What is long term in Share market ? Empty What is long term in Share market ? Sat Oct 06, 2012 9:29 pm

notme

notme
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

There are mainly 3 time frame in markets

1. Short term (6 months – 2 yrs)
2. Medium term (2 yrs – 8 yrs)
3. Long Term (8+ yrs)

We are taking about long term investing from point of view of Investor , which invests in a company on the basis of fundamentals and valuations .

Time Frame is a relative term , Short term for some one can be medium term for some one and long term for other . similarly if some time duration is long term for you , it can be short term for someone else .



But here we are talking about an average investor . So lets look at predefined tenures .

from my understanding, any time frame less than 6 months shall be considered as trading Time frame . Traders are people who like to take advantage of short term price movements based on news , Charts patterns etc .

One thing you must understand before hand is that Risk and returns are proportional , If you take high risk , there are chances of high Returns.

Now , lets see different time frames .

Short Term (6 months – 1 yrs) : Any investment made from 1-3 yrs should be considered as short term .

Risk/Return Potential : VERY HIGH .

Investing for short term : Invest for short term only if you can afford take the risk . Its always good , not to invest for short term for any goals which are very important . Like for example, if you are going to have an operation or a marriage after 1yrs , don’t put your money in stock markets for less than a year to gain extraordinary gains . Its for professionals , not for an average investor . do it if you can afford to risk loosing it .

Low risk Short term investment option : Corrections in a BULL RUN : If there is a BULL Run , wait for a correction , It happens many times that there is some correction in stock markets , At that time you can do some investments for short term like 6 months – 1 yrs . Invest only when markets start rising again . Have a level in mind where you will take loss if it goes against you . There is no guarantee of profits ever . If you are in profit after 6 months, take your profits and get out , don’t convert your short term investment in long term one , One who can not be loyal to his plan in markets will eventually loose it all some day . Same thing can be applied to short selling in corrections in Bear markets .

Example : In april 2005 , Oct 2005 , June 2006 , there was very good correction , after which it gave 30-40% returns within 6 months – 1 yrs .

Medium Term (1 yrs – 3 yrs) : Any investment made from 2-8 yrs should be considered as Medium term .

Risk/Return Potential : HIGH/Medium : Higher the tenure , lesser the risk .
Also it depends on the situation , there is again no guarantee , There can be some time , when there can be high risk in 3 yrs and some time it can less , but over all it should be less than the short term investment .

Investing for Medium Term : You should invest for medium term for goals like Car , Vacations , etc and some part of portfolio for House , etc (close to 5+ yrs , not 2 yrs) . Choosing well diversified portfolio and investing in strong fundamentals is extremely important . Good timing is always important in any time frame . but its difficult to time the market .

Low risk Medium Term Investment Time : After a Bear Market is there for some time around , and markets have fallen considerably , you can start accumulating good stocks with good valuations every month in installment . Don’t jump and put all your money at once ,just because you feel , “now markets have fallen much” , Markets are supreme and you are no one to “feel” or “tell” markets movements . Just expect it to come back soon and now start accumulating good shares , or start a SIP . There is no guarantee of any profits , we are just discussing the low risk opportunities here .



Example : Current time . This is an excellent time to start accumulating fundamentally good stocks in installments over next couple of months , especially a big chuck should be invested when there october lows are breached within some days ,which is expected with high chances .

Long Term (8+ yrs) : Any investment made from 2-8 yrs should be considered as Long term .

Risk/Return Potential : LOW , By Low do not think that we are saying you will get lower return , we are talking about CAGR , obviously the CAGR you can expect over long term is lower than the CAGR which you can expect in short term or medium term , but more important is the risk , the loss potential , and that is extremely low here , almost Nil i would say , This I am saying on the basis of past historical data . Loss is possible but chances are very bleak .

Investing for Medium Term : You should invest for Long Term for goals like Retirement , Child Education , Children Marriage or any financial goal which is to be taken care of after 8+ years , Do it using SIP .

Low risk Long Term Investment Time : Ideally speaking , you can start doing this any time without seeing the current situation of market , because over long term it would matter less that when you entered markets . This does not mean that timing is not important in growth of money , obviously , If you enter neat the end of bear market or at some other important time, it would help . But the point here is that , it would not harm if you start investing for long term at any time frame assuming that you are diversifying it well across sectors and stocks and also apply some extremely beneficial techniques like Portfolio rebalancing over this long tenure . Don’t get scared by these words ,they are extremely easy to understand things and can be applied by anyone , and it does not take much time also , The only thing required from investor is the his share of determination to do all this .



Final Note : What ever i have talked about here are my personal views and my own idea of short term , medium term and long term . It can differ from people to people with different risk – appetite . Also understand that deciding your time frame is extremely important to deal with the situation in markets after investments .

For example , if you decide that you are investing your money for your retirement which is going to come after 25 yrs , then it would be really easy for you to digest the volatility of markets and to see it going down while you invest . So know your time frame and invest it smartly at correct time . Don’t try to get smart and get greedy . Markets are the place where Albert Einstein and Issac Newton also failed and returned to try what there were good at . That does not mean we will also fail . Don’t try to made fast money , in fact try to make smart money .

For new comers in this area, its advisable not to enter through Direct equity , better go though mutual funds , and please listen to people when they tell you all this, don’t get smart , else you will be ruined like millions others
.
source-http://www.jagoinvestor.com

2What is long term in Share market ? Empty Re: What is long term in Share market ? Sat Oct 06, 2012 9:58 pm

traderathome

traderathome
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

My Longterm = 1 year
Very Happy

3What is long term in Share market ? Empty Re: What is long term in Share market ? Sat Oct 06, 2012 11:29 pm

kalum


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Longterm = 1 year, doesnt fit. You may have to change the strategy or change the wording Wink

4What is long term in Share market ? Empty Re: What is long term in Share market ? Sat Oct 06, 2012 11:49 pm

traderathome

traderathome
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

kalum wrote:Longterm = 1 year, doesnt fit. You may have to change the strategy or change the wording Wink
actually it depends from trader to trader...based on strategy i am holding...........for another trader/investor he could define as the above article.....

Sorry not trying to confuse you guys... Very Happy
TAH

5What is long term in Share market ? Empty Re: What is long term in Share market ? Sun Oct 07, 2012 12:18 am

StockGuru

StockGuru
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

I believe CARS, BUKI,JKH,SPEN,AHUN,AHPL,TRAN,HAYL,RICH are good for long term!

6What is long term in Share market ? Empty Re: What is long term in Share market ? Sun Oct 07, 2012 2:55 am

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics

"Any investment made from 1-3 yrs should be considered as short term ."


Some people head might b spinnig now. 1-3 years. They will think is is mad to hold for 3 year forgeting about short term.


Clearly many mistake true investing Vs trading for capital gains.


7What is long term in Share market ? Empty Re: What is long term in Share market ? Sun Oct 07, 2012 5:24 am

Rajitha

Rajitha
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Sorry everyone seems to be giving wrong answers so far
Long term in share market= When you fail to make big gains from stocks in a weeks or months they are classified as long term investments. This is hoping that at some day they might give a decent return.

8What is long term in Share market ? Empty Re: What is long term in Share market ? Sun Oct 07, 2012 5:56 am

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics

For those who cannot still understand the difference between long term investing and short term trading/optimization see below. Only the people with broader mind will see.



http://forum.srilankaequity.com/t12490-who-have-experience-in-long-term-investments
http://forum.srilankaequity.com/t12325-chevron-lubricants-lanka-plc-llub-dividend-from-1999
http://forum.srilankaequity.com/t12425-brainteaser-quiz-result-cic-company-detail-updated?highlight=brainteaser

9What is long term in Share market ? Empty Re: What is long term in Share market ? Sun Oct 07, 2012 9:19 am

wgsaman

wgsaman
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

long term means more than 10 year investment

10What is long term in Share market ? Empty Re: What is long term in Share market ? Sun Oct 07, 2012 10:23 am

Monster

Monster
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

Rajitha wrote:Sorry everyone seems to be giving wrong answers so far
Long term in share market= When you fail to make big gains from stocks in a weeks or months they are classified as long term investments. This is hoping that at some day they might give a decent return.
I disagree with you. Your statement may not be correct for everyone. I am still holding certain shares, which I purchased 5 years ago and I have no idea to dispose it near future. Probably my kids will inherit from me. None of these shares became long term, just because I failed in short term.

I used to maintain two accounts for Long/Medium term investment and short term trading. Some people say we should not sell at loss. But I disagree, depends on the market condition we should sell even at loss and buy back when you get another opportunity.

11What is long term in Share market ? Empty Re: What is long term in Share market ? Sun Oct 07, 2012 10:34 am

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics

Monster wrote:
Rajitha wrote:Sorry everyone seems to be giving wrong answers so far
Long term in share market= When you fail to make big gains from stocks in a weeks or months they are classified as long term investments. This is hoping that at some day they might give a decent return.
I disagree with you. Your statement may not be correct for everyone. I am still holding certain shares, which I purchased 5 years ago and I have no idea to dispose it near future. Probably my kids will inherit from me. None of these shares became long term, just because I failed in short term.

I used to maintain two accounts for Long/Medium term investment and short term trading. Some people say we should not sell at loss. But I disagree, depends on the market condition we should sell even at loss and buy back when you get another opportunity.

I agree with Monster.
This link should clarify everything is one reads.
http://forum.srilankaequity.com/t12490-who-have-experience-in-long-term-investments

12What is long term in Share market ? Empty Re: What is long term in Share market ? Sun Oct 07, 2012 12:26 pm

Rajitha

Rajitha
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

If you are a lazy bu who want to invest in a market and forget about it sure you can go long term. All other active or semi active peoples long term investments are investments that failed in the short term.

13What is long term in Share market ? Empty Re: What is long term in Share market ? Sun Oct 07, 2012 12:39 pm

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics

Rajitha wrote: If you are a lazy bu who want to invest in a market and forget about it sure you can go long term. All other active or semi active peoples long term investments are investments that failed in the short term.

You are entitled to your opinion. When many if us have constantly shown you the power of long term investment with examples many times before you just blindly oppose to deny it everytime. If it does not suit you then fine. We do not object to that or oppose you. But you need to give the same courtesy and not criticize others who are different to your opinions.

If there are many who think like you , and top 20 list of shareholders of companies start thinking like you I can't imagine what will happen to CSE. It will be utter chaos. Maybe the Captain and Dr Sentilverl and many other investors must be lazy and crazy according to you.

Again you can hold onto to your opinion but do not critize others as you experience is limited and you are only talking about optimizing profit in shorter term.

14What is long term in Share market ? Empty Re: What is long term in Share market ? Sun Oct 07, 2012 12:51 pm

Rajitha

Rajitha
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

slstock wrote:
Rajitha wrote: If you are a lazy bu who want to invest in a market and forget about it sure you can go long term. All other active or semi active peoples long term investments are investments that failed in the short term.

You are entitled to your opinion. When many if us have constantly shown you the power of long term investment with examples many times before you just blindly oppose to deny it everytime. If it does not suit you then fine. We do not object to that or oppose you. But you need to give the same courtesy and not criticize others who are different to your opinions.

If there are many who think like you , and top 20 list of shareholders of companies start thinking like you I can't imagine what will happen to CSE. It will be utter chaos. Maybe the Captain and Dr Sentilverl and many other investors must be lazy and crazy according to you.

Again you can hold onto to your opinion but do not critize others as you experience is limited and you are only talking about optimizing profit in shorter term.

There is the a thing called liquidity. If you can get over 100% profit for most of those big companies and some one will buy the whole share lot I'm sure most of them will sell out. Unfortunetly million dollar investors can't do short term because of barriers like this. No one want to hold for 10 years and get 100% gain if you can get that 100% gain in 10 days.(considering you are not stupid)

The above theory does not apply to most investors in this forum. OF course there are some illiquid shares you might have to go long in markets like CSE but if possible you will always take the 100% return now than wait 10 years for a scrap more.

15What is long term in Share market ? Empty Re: What is long term in Share market ? Sun Oct 07, 2012 1:09 pm

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics

Rajitha wrote:
slstock wrote:
Rajitha wrote: If you are a lazy bu who want to invest in a market and forget about it sure you can go long term. All other active or semi active peoples long term investments are investments that failed in the short term.

You are entitled to your opinion. When many if us have constantly shown you the power of long term investment with examples many times before you just blindly oppose to deny it everytime. If it does not suit you then fine. We do not object to that or oppose you. But you need to give the same courtesy and not criticize others who are different to your opinions.

If there are many who think like you , and top 20 list of shareholders of companies start thinking like you I can't imagine what will happen to CSE. It will be utter chaos. Maybe the Captain and Dr Sentilverl and many other investors must be lazy and crazy according to you.

Again you can hold onto to your opinion but do not critize others as you experience is limited and you are only talking about optimizing profit in shorter term.



There is the a thing called liquidity. If you can get over 100% profit for most of those big companies and some one will buy the whole share lot I'm sure most of them will sell out. Unfortunetly million dollar investors can't do short term because of barriers like this. No one want to hold for 10 years and get 100% gain if you can get that 100% gain in 10 days.(considering you are not stupid)

The above theory does not apply to most investors in this forum. OF course there are some illiquid shares you might have to go long in markets like CSE but if possible you will always take the 100% return now than wait 10 years for a scrap more.

It is evident what kind of a person you are and it "stupid" to argue with people like you. You have about 3 years experience at CSE right? So you form your opinions on some strategies that worked for you. You can hold onto your opinion and stategy if that suits you. No issue.

But do not call others "stupid" crazy or critize their moves. That why I respond to you.

I presume ALLI and DIMO you held is a failed short term investment then. Maybe these companies do not have potential to increase its value in times to come ? Share market goes thorugh different periods. Nobody said to hold forever ( except Warren Buffet) . Even long term player can dipose once their target are reached.

Just to refresh your memory about how argued about long term investmentsw see the below thread where many with more experience than you commented and shown examples . Yet you come back to show your opinion is only the right one.


http://forum.srilankaequity.com/t12490-who-have-experience-in-long-term-investments

16What is long term in Share market ? Empty Re: What is long term in Share market ? Sun Oct 07, 2012 3:51 pm

traderathome

traderathome
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

Rajitha wrote:Sorry everyone seems to be giving wrong answers so far
Long term in share market= When you fail to make big gains from stocks in a weeks or months they are classified as long term investments. This is hoping that at some day they might give a decent return.
Dear Rajitha....... Very Happy

Well I have to disagree with you partly.....for me longterm starts with 1 year Very Happy

I will exit all my positions when the trend changes based on indicators tweaked to identify the latter....I am an Investor & Trader. So there is no question to fail when unable to make huge gains, as i trade with stop losses and not attached to share emotionally to hold on for years......

TAH

17What is long term in Share market ? Empty Re: What is long term in Share market ? Sun Oct 07, 2012 10:51 pm

kalum


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Rajitha wrote:Sorry everyone seems to be giving wrong answers so far
Long term in share market= When you fail to make big gains from stocks in a weeks or months they are classified as long term investments. This is hoping that at some day they might give a decent return.

Agree to disagree.

Long term investment is a concept. If some one fail to gain expected profit and decided to hold, it is not a long term investment. It is the strategically decision he made. ( i did this and will be doing it in future as well) Every bit of people who deal with CSE has both investor and trader in them. But you want be a good investor if you cant grab whole investment idea behind this game.

100% gain on short-term play is a good strategy. But assume not always what we expect is not happened in the market.

If some one decided for long term investment, there are many facts he or she will consider before entering. IF i decided to buy share X for after some study for say 5 year period, least. The very next day it will tend to fall in 10%, in a year it will occur me 20% loss. But as far as "i think" i get the correct logic, i will not bother the market conditions or where the ASI. My focus will be in 5 years.

I see most people blame government to invest EPF on CSE. EPF is a long term investor in sri lanka share market and it is not a new thing government risk the sri lanka's largest fund in to the market. these things happened well before market crisis as well. Different was not most people ever interest on the CSE before 2000's. And not we have so call public economic specialist like harsha's in action that time. but whole lot of investors was benefit including EPF from the beginning.

If you want, i can share one of my portfolio investment with COMB to get some idea about long term investment.Let me say im a small scale investor. In my strategy, i'm not holding 100% of the stake but willing to sell/by 10% - 20% depends on certain market moments. You will not believe i bought COMB.X at the peak of 95.10 in mid-september. with respect to the current situation some one refer me as a "fool" but it is what i done as a "invesment" for future.

18What is long term in Share market ? Empty Re: What is long term in Share market ? Sun Oct 07, 2012 10:56 pm

kalum


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

traderathome wrote:
kalum wrote:Longterm = 1 year, doesnt fit. You may have to change the strategy or change the wording Wink
actually it depends from trader to trader...based on strategy i am holding...........for another trader/investor he could define as the above article.....

Sorry not trying to confuse you guys... Very Happy
TAH

Sure, I know what you mean. It depends, but i still think you don't do the "investments", just trading Wink

19What is long term in Share market ? Empty Re: What is long term in Share market ? Sun Oct 07, 2012 11:13 pm

traderathome

traderathome
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

mmmm i am trading and investing.....both....but not planning to own them for life...just good to follow the trend...when trend gets exhausted and reverses i will sell off........ Smile

TAH

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