Hi All,
I have gone thorough this entire thread as much as possible.
Most of the time, I have a feeling that, Long term buy and hold kind of stocks are those which are in existence for 2-3 decades or at least for 15 years. In the hindsight, we may think that these are good long term stories which can compound the wealth but the question is how to ensure that, the stock which we select for long term today, will create that kind of wealth for next 20 years. For every successful HDFC bank, there is Yes Bank which has not created that kind of wealth. How to detect if we are not investing in next Yes Bank?
Similarly for every TCS, there could be Satyam or any other such company, so one need to be very careful while selecting the long term stock.
Even if we select best business based on the past track record, there is no guarantee that, it will create similar wealth in future. Corporate governance may lapse due to change in management.
So it is prudent to take the approach that, an investor can look for high quality stocks for next 4-5 years and keep reviewing its moat, performance, corporate governance at least once in a year. In some situations, you may like to exit from few stocks and enter into new stocks based on their improving moat and balance sheet.
Also, the sectors which have created wealth in the past will not mostly create wealth in next 20 years so taking very long term approach could be challenging. Better to look for quality business and buy it when it looks undervalued and keep reviewing its performance at least on yearly basis.
I will like to know if there are actual investors who have created wealth by sticking to same stocks for 20 years. I think, if they can share their story, that will help us to gain some insights.
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