[Summary]
Long-termism is a way of thinking that emphasizes long-term results over short-term fluctuations.
When looking at long-termism in terms of long-term investing, we look to see if the assumptions continue over several years rather than short-term price movements.
In actual investing, the starting point is to focus on business value, time, and compound interest. However, it is important to note that it is easy to neglect reviewing due to long-term considerations.
In this article, we will organize long-termism not as "knowledge" but as a step to confirm before buying or selling. Don't rush to conclusions, read according to your financial amount and time horizon.
First, divide based on long-termism.
When looking at long-termism, first determine what you want to judge. The information you need will change depending on whether you want to know the meaning, confirm before buying or selling, or review your current holdings.
Especially for beginners in investing, the easier the words are, the more they tend to take them as a conclusion. Long-termism is not the only factor in making decisions. If you want to check it, it is more realistic to look at it in conjunction with fund management, holding period, and opposing materials.
Conditions for viewing long-termism in the long term
If we look at long-termism as a long-term investment, we must first make narrow assumptions. It is important not to mix up whether you are talking about the market as a whole, individual stocks, NISA or long-term funds.
Checking the following points will make things a lot easier.
| Axis to check | What to look at from a long-term perspective |
|---|---|
| purpose | What do you use to judge? |
| Time axis | Which is closer to short-term trading, long-term holding, or NISA? |
| basis | Which one is more important: price, business performance, interest rates, exchange rates, or psychology? |
| risk | When things go the other way, where should you look again? |
| action | Will it lead to buying, selling, or doing nothing? |
Points that can easily cause trouble in making decisions
Long-termism doesn't only stumble when you lack knowledge. In fact, there are situations where we interpret something conveniently because we know a little bit about it.
- Check whether the assumption of long-termism is likely to remain in place several years from now.
- Don’t let short-term news disrupt your long-term policy
- Determine which is the main focus: business performance, interest rates, exchange rates, or supply and demand
- Create a design that does not require too much concentration so that it lasts for a long time.
The important thing here is not to settle on a single correct answer based solely on long-termism. In investment, the meaning of the same material changes depending on the market, holding period, and amount of funds. When in doubt, prioritize confirmation over conclusion.
Checklist before buying and selling
Before using long-termism as a basis for making an actual decision, check at least these five things.
- Can you explain in one sentence the purpose of looking at long-termism?
- Have you confirmed one or more countermeasures or failure conditions?
- Are you investing your living funds or money that will be used soon?
- Have you decided in advance the criteria for cutting losses, taking profits, and continuing to hold stocks?
- Are you making judgments based only on social media or short headlines?
Checklists are simple, but they prevent you from adding reasons after making a decision. The purpose of checking long-termism is not to act faster, but to reduce unnecessary errors in judgment.
Summary
Long-termism is an ingredient for organizing investment decisions. Even if you read it as a long-term investment, your judgment will be inaccurate if you treat it as a single buy or sell signal.
The points to keep in mind are as follows.
- Decide first the purpose of looking at long-termism
- Do not mix time axis and amount of funds
- Check not only good materials but also negative materials
- When using NISA and long-term funds, consider how to handle losses
- When in doubt, reduce your position or postpone it.
The more knowledge you have, the safer it seems, but in the market it can become dangerous if you use it incorrectly. It is realistic to treat long-termism as a tool to pause before buying or selling, rather than as a word to rush into judgment.