It is like asking which one night stand is good for a healthy relationship. Sounds a bit like an oxymoron, isn’t it ?!
Stocks by definition are not for the short term. Trying to grow wealth in a short time frame is as risky as say, trying to lose 10 kg weight in 4 days.
Many people in the quest to make a fast buck in the stock markets decide to ‘do trading’ or dabble in derivatives and lose money. Legends like Warren Buffett made their wealth by patient long term investing and not by borrowing money and investing in derivative. The Indian big bull, Rakesh Jhunjhunwala himself said last week, “99.99%” people lose money in trading.
Instead invest in companies that have strong fundamentals, ratios such as Return on equity, debt equity and show good secular growth in their numbers. Such companies have strong brands and moats that protect their ‘unfair advantages’.
The problem is that even by investing in such companies you are not guaranteed about making great returns in the short term. Because the market is affected by many currents in the short term, that are entirely unpredictable, you must not have a short term timeframe. These currents might be geopolitical (US China trade wars), weather (Indian monsoon may go bad), biological (Covid 19 crops up suddenly) etc.
In the short term markets are a voting machine, but in the long term they are weighing machine. You may vote for short term pleasure, but in the long term the weight will show up!
For a good long term investment model, do check out http://JamaWealth.com , a clean and transparent wealth advisory, which is surprisingly clean & unique: Not a broker, Not an agent, No commissions, No indirect fees, Touch-less on your money, No ‘hand-over’ or custody, No exit loads, No lock in, No loans and No third party products.
More reading:
- A good investment philosophy to swear by. One that picks stocks with strong Roots (ROE, Good Promoters, Low Debt) and powerful wings (market share, growth).
