48 SMART: Long Term Investing Insights
+Smartan Dad

Wednesday, 25 April 2012

Long Term Investing Insights


I always input myself saying that long term investing will bring good ROI (return of investment).
But some peoples told me that, the shares market definitely will kill me.

In Malaysia, there are five types of gambling are legalize.

No. 1 - TOTO
No. 2 - MAGNUM
No. 3 - PMP (KUDA)
No. 4 - GENTING CASINO
No. 5 - ????

Who can guess what is no. 5? They told me the shares market is the largest gambling center.
Actually I don't agree with them. Because I believe with Warren Buffett investing insights.
 


Left side is the KLCI that around 1 year time period. What can we notice from the chart?

In the short-term, the market randomly goes through up trends and downtrends. Spike and Busts. This volatility is what causes loss an fear to the gamblers or inexperience investors.

Next, what do we see from the new chart?
If you had invested in a one year period as above chart. Your chance of loss would be as much as 20% or more.


But if you've invested in a 3-year period, your chances of loss would have been 0%. Your chance of gain would be more than 50%.

In the words, you always win and make money if you hold your investment long enough.

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