Questions and Answers on the topic of Investment
How long should I hold a share?
I often repeat from three to five years, which should have already adjusted your thinking.
But the truth is, I think you need to invest for 30-50 years. Of course, this does not apply to every stock, but when you buy an investment, I believe that you should at least look at the period three years ahead and guess what? If this is true for you, you are playing the game differently from most of the world.
Most of the world is thinking about what to do next month or six months or a year. One year feels like a long term for many of the people I watch on CNBC or elsewhere. This means that today’s average mutual fund starts on January 1, does not even hold the same shares until December 31. So you and I are different, and we are thinking at least three years ahead.
It is clear that we are playing a different game. We play the game the way it should be played.
In fact, the way we will win. Because in the end, your profits will come from longer-term holdings. The best come with time. So in conclusion, at least three years will put you in a place where you play the game differently from others, and this is a game you will win. Follow us, see what we do with our shares, see how long we hold them.
Do the same. We will do it well together!
Do I need to invest in rising stocks during new market highs?
First, I mean, I don’t really think of stocks as growth stocks or, as some people say, value stocks – I don’t put it that way. I could say “Is the company doing well or not” or “Do the shares look cheap?” In fact, I would encourage you not to even think about these terms.
Because if you ask ten different people, “What is a growth stock?” you will get ten other answers. But anyway, I have to answer such questions very often – should we invest in highly valued companies with premium prices when the market seems to have done so well already?
I have a question for you: if you are reluctant to do so at such a time, then at what point will you decide that it is finally time to buy such companies? I think we often say in our heads, “Well, if the market goes down for a while, I’d start buying these great companies right away, because then they’re going to be cheaper.” In my experience, the problem is that many people find it challenging to do so. Once the market falls, they begin to fear, thinking it will lose even more. So many people go through life and never buy the most significant companies of their time. Companies like Starbucks (NASDAQ: SBUX) or Amazon (NASDAQ: AMZN), or Netflix (NASDAQ: NFLX), Tesla (NASDAQ: TSLA) – some of the most astonishing stocks in your life. If you don’t own them yet, I personally doubt that market conditions will change your mind. I think you need to change your mindset in terms of which companies you want to own and if you play the game for a long time – the only game that matters – I think you need to buy every single great company of the day and keep them at least 3-5 years, if not three decades.
How many shares should I buy from one company?
Suppose you want to buy a Tesla (NASDAQ: TSLA), which we just come up with because of the example that it’s about $ 600 a share.
What follows from this? Clearly, if you have about $ 600, you’ll obviously buy a share from Tesla, and by the way, that’s fine. Ultimately, more important is how much money you invest in Tesla. The function of how many shares you buy is exactly what the share price is. So, if you have $ 6,000 free, how many shares of Tesla would you like to purchase then, assuming you want to buy Tesla? The answer is 10.
It’s simple math for the most part. How many shares should you buy when looking at a company? It would help if you looked at the stock price and how much money you have and then buy the appropriate amount.
Or maybe you’re asking me this question, keeping in mind the following: How many stocks do I have to buy from a bunch of different companies while assembling my portfolio? My best advice for you is not to think so much about the stocks you would buy, but about the amount of money, you would invest in each of them.
Let’s say we have selected five companies. So, if you have the $ 6,000 in question, I would suggest investing one-fifth of it in each of these five companies. I think that’s $ 1,200 for each company. After all, a portfolio is built and maintained for a lifetime, so don’t think so much about how and how much to start. The most important thing is to begin!
How many companies should I invest in?
Let’s start with the fact that, after all, most of the world does not own any shares at all.
But here you are. You have tried to find us, you have made an effort, and you realize that you need to buy shares for investment, find companies that you admire and make your portfolio reflect your best vision for our future.
So we start with a company. But once you’ve bought your first stock – I hope you have – I think you should reach 15 as the minimum portfolio basis.
Fifteen stocks, so you have about 5-8% of your money in each. This gives you a fair and broad base for diversification and gives you a chance for an excellent portfolio. You are committed to investing at this time. Some of our members already own over 15 shares. I also know people with over 250. They just love to build a vast, broad, diverse portfolio for life and have the opportunity to do so. Others have a more focused approach. They think, “Hey, I’m just going to own my favourite 15 companies.” And they add only in these companies with each adjustment in the market. So you have to think in your context what matters most to you. But if we talk only about stocks – I think 15 is a good base.
When should I sell a company (share)?
My first answer is when you need the money. In the end, that’s why we invest!
Why do we invest in the first place? We keep our money away from us, do not enjoy the benefits of spending it right away, and let it grow over time. Why? Well, maybe the reason was to raise money for our children’s university, to travel the world, or to retire appropriately and with dignity. Each of these reasons is a great reason to sell.
You notice that I am talking about you and your life decisions and needs. I’m not talking about reasons like the current share price, or that a stock has just doubled, or that it has collapsed deeply. My opinion is that the sale concerns mainly you, not your shares.
But let’s talk about stocks briefly. Basically, I try to sell shares if they no longer meet my criteria, when I initially decided to buy them, and things started to worsen. For example (and this is the leading criteria for me), if you have lost a favourite CEO and do not like the new leadership. Or maybe the application you’ve invested in or this new technology you’re excited about isn’t expanding and starting to lose its potential. Or perhaps the FDA hasn’t approved this biotech company that you’ve liked and bought so many times. If you are negatively surprised by corporate development, this would be another good reason to sell.
In conclusion, please note, I do not even mention things like what the stock price has done. The question of how high or low the share price has gone is not essential; the important thing is to look at the company itself and then, above all, to look in the mirror and ask the person in it why he initially decided to invest.