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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Stay away

Posted by Muthu on March 14, 2017

I was reading a book yesterday where it mentioned about average holding period of equity by geographical region. In Europe, it is 12 months, Asia-Pacific: 10 months and America: 8 months.

I’ve been sharing various data points of average holding period of shares and mutual funds in India. Many of you are holding on to equity investments for last 7 to 10 years. This is extremely rare. After selecting couple of good diversified equity funds or a dozen quality stocks, what is important is how long you hold. Only a very small percentage of investing population hold for 10 years or more.

Having chosen the right path and long term investment horizon, all you’ve to do is stay away from noise. Last year, if you see, noise of Brexit, Trump win and demonetisation nudged derailing the course and staying away from equity. Like this, every year, there are going to be events and noise from those events to move you away from the chosen course.

Though I very actively read news, magazines, blogs, social media etc., I just don’t react to these. If you feel that you are unable to avoid panic in such circumstances, consume less news, especially of the financial kind.

As a stock picker, I interact with few other investors. I’ve started staying away from those who are critical of my method or companies I hold. Neither my method nor my holdings are perfect. There is no such thing as the right method or the best companies in investing. What is important is evolving a reasonable investment strategy and sticking with it through thick and thin. Sticking to one’s strategy over long run itself is difficult as it would go out of fashion or may not produce results all the time. Over long time (10 years+), any good strategy should work.  The last thing I want is someone keep questioning me or negatively criticising me. If you want different views, there are sources to read about the same through books, blogs and social media. There you can get a different view without going through personal criticism or contempt.

Why I’m saying this? Despite being a full time investor and advisor, I find such negative people disturbing. You’re neither an advisor nor a full time investor. Hearing views from your friends, colleagues or relatives about your investment strategy would be mostly counterproductive. We are always there to keep reinforcing and nudging you to stay the course. Other than us, listen to only people who you feel would help you stick to the chosen strategy and stay the course. Stay away from others, at least as far as your investments are concerned.

What you are doing, having a really long holding period, is a very rare virtue in investing.  Ensure that it is not derailed by negative influence.

Stay away from such sources.

3 Responses to “Stay away”

  1. I think the ability of a great professional lies in handling such “criticisms” or rather call it “feedback” and do not get swayed by irrelevant chaos and confusion created by many people. One should not shut from feedback. Always seek constructive feedback and suggestions.

  2. ASHISH GUPTA said

    I am amazed by your ability to say the same thing every day in so many different way! Keep holding equity for long term!

  3. Vijay Dabade said

    Rightly stated: stay away from negative news and people.

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