Two simple Techniques to hold your Shares for long term

 13^th January 2022

Two simple Techniques to hold your Shares for long term

Dear Fellow Investors,

Namaste! I often see investors telling me that they will buy and hold particular stocks for a lifetime or for 5 years or for 10 years and blah, blah. Next time I meet them or communicate to them – they will tell me that they have sold those shares and bought some other stocks for the LONG TERM!!

Those who are doing these are suffering from the following disadvantages.

1.   They miss the potential for multi-fold returns which a share will start after they sell.

2.   The new share which they buy will also need some time before it picks up the momentum.

3.   By the time the new share picks up the momentum – they sell that also.

4.   They are always unhappy with the performance of their so-called long-term investment experiments.

5.   Their brokers love them.

6.   Income Tax guys also love them as they keep on paying the capital gain tax.

When I started my career – I had been taught the two techniques for long-term holding of shares. Till today I am following the same, irrespective of the share's ups and downs in a given period. The most successful investors also follow these techniques without fail.

Two Techniques for holding shares for the long term: -

1.   When you decide to buy or buy any investments – write down a detailed handwritten note. The note should have the following things. 

a.   Why you are investing in this company?

b.   What are your estimates about the future of this company?

c.    How long the company will take to reach the top of its product life cycle or business cycle or business potential?

d.   Now, write down a new short note every time the company comes out with quarterly or yearly results.

e.   If you go on doing this for a particular company for at least 3 years – you will understand their business and their potential in a much better way.

f.    Every time you follow the above steps – your conviction in your investments will go up.  

So, when you are presented with a new investment idea – look at the above note. If you have written the note with all sincerity – you will say NO to selling these investments and buying something new. This way you will hold your investments for the long term and make tons of money. The NOTE must be handwritten and not on some computer or mobile.

2.   Keep your DEMAT and BROKING account separate: - 

Three in one account is the new normal nowadays. They open your bank account – trading account and Demat account and take your power of attorney for Demat account. This makes it easy for buying and selling shares and 99% of investors would say YES to these arrangements.

I am an old-school fellow. I keep my broking account with one company and Demat account with the other company. I have not taken an online transfer facility also. So, I have to go to the bank to give Delivery Instruction Slips every time I sell the shares. Now, this is a very boring activity. To write down a slip – to go to the bank and to stand in a queue to submit the slips. Thanks to these – most of the time – I can manage my impulse to sell the stocks as I don’t want to go to the bank for giving instructions.

Before DEMAT – we used to send our shares for transfer. During 1992-96 – the delivery of shares used to come after 1 month to 3 months. When you send them for transfer, it used to take another 3-6 months. This way we used to stop our urge to sell the shares. Once the shares come – we keep them in a locker. This was an old-time technique. So, every time you sell the shares – you have to go to the locker.

What NEXT?

My stock market guru taught me this technique in 1992  and I have got immense benefits by following them. If you find that you are not able to hold your stocks for the long term – you may try these techniques and shares your feedback after 3-5 years. I am sure you will be blessing me.

With you all a happy investing.

Follow me on Twitter @hiteshmparikh Or on Whatsapp - +91-9869425399.

Learn a Lesson. Live with Passion & Invest with Reason.

Hitesh Parikh.