The Usage of Timeless Theories

In the world of investing, there are numerous Gurus which came up with different theories that allowed them to make significant gains over the super long term.

Many of us tried very hard to mimic these theories in real life and we gave up half way.

There are many reasons why we gave up:

1. We cannot wait so long.
2. My holding power is not as long as theirs.
3. We are in a growth stage.
4. Recession is coming.
5. We are not them.

and many more...

In my opinion, whoever follows these timeless theories must understand the following 3 points: 

(1) the main gist of the theory: 

For example, Ben Graham theories requires you to understand liquidation value, while Warren Buffett/Charlie Mungar requires you to understand competitive edge.

(2) the theory behind long term holdings:

Long term holdings doesn't really mean buy and hold forever. If there are negative fundamental changes, we should be quick to sell those holdings.

In my view, long term holdings meant that when you buy, you are prepared to holding for a longer period like at least 1 year. However, with the world changing constantly, if you made enough gains, or there is a better choice out there, you can always sell!

(3) I buy doesn't mean you should buy:

We probably should not buy into companies that the Gurus bought. This is probably because you pushing up the share price will only help them and not you. What we can learn from these Gurus' purchases are the reasons why they go into these companies and we can always look for companies with similar traits.

Another simple post which I hope allowed you to understand more about investing.

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