1. A long-term investor knows that there is no formula for picking winners always, hence he keeps his return expectations normal to beat inflation and earn more than bank deposit rates.
2. This may involve a few loss-makers and a few multi-baggers, which is a normal process to build reasonable wealth without insisting that each investment should give high annual returns.
3. Investment is a long-term process-driven approach - and building wealth is a slow regular process - which mixes discipline, intelligence and experience that can extend for decades.
4. Earning wealth too quickly may make you rich, but it does not give you experience in acquiring it - which is vital for keeping and growing that wealth.
5. For a "process approach" investor, the focus is handling an allocated asset portfolio to deliver a goal-aligned return, with a defined level of downside risk it can take, and the intent is to make money from such businesses that holds the promise of strong future earnings, with constant checking, verifying and revisiting the initial assumptions made.
6. For an "outcome-approach" investor, the focus is capital alone, and the intent is to make money work hard and fast, cut losses and move on to running faster.
7. Therefore, he short-changes the "tough and long-drawn" process-approach and seeks to invest on the basis of "audacious tips and names", even resorting to frequent "churns and switches", for "maximum outcome" at all times, and thus becoming totally dependent on "getting lucky".
8. A shift is, therefore, needed in the investor mindset because investing cannot always be about making opportunistic short-term gains, and windfalls cannot be a regular, sustained event.
9. Risk in short-term investing for an unexpected windfall needs to be acknowledged, unless unlimited capital is available at low costs.
2. This may involve a few loss-makers and a few multi-baggers, which is a normal process to build reasonable wealth without insisting that each investment should give high annual returns.
3. Investment is a long-term process-driven approach - and building wealth is a slow regular process - which mixes discipline, intelligence and experience that can extend for decades.
4. Earning wealth too quickly may make you rich, but it does not give you experience in acquiring it - which is vital for keeping and growing that wealth.
5. For a "process approach" investor, the focus is handling an allocated asset portfolio to deliver a goal-aligned return, with a defined level of downside risk it can take, and the intent is to make money from such businesses that holds the promise of strong future earnings, with constant checking, verifying and revisiting the initial assumptions made.
6. For an "outcome-approach" investor, the focus is capital alone, and the intent is to make money work hard and fast, cut losses and move on to running faster.
7. Therefore, he short-changes the "tough and long-drawn" process-approach and seeks to invest on the basis of "audacious tips and names", even resorting to frequent "churns and switches", for "maximum outcome" at all times, and thus becoming totally dependent on "getting lucky".
8. A shift is, therefore, needed in the investor mindset because investing cannot always be about making opportunistic short-term gains, and windfalls cannot be a regular, sustained event.
9. Risk in short-term investing for an unexpected windfall needs to be acknowledged, unless unlimited capital is available at low costs.