Are Long-term Stock Investors Stupid?

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Stock Market Investment and Trade Strategies - JayceeDeGuzman.com

“The most stupid people today are going to school working hard, investing long-term in the stock market, and paying off school debt.”- Robert Kiyosaki

This became the headline on newspapers, finance-based websites, and stock market groups after Kiyosaki’s Masters of Wealth coaching event held in Manila last November 30, 2015.

I am 200% sure that this moved you when you heard or read of Kiyosaki’s opinion because he called long-term investors as the “most stupid people today”.

If you’re going to literally accept Kiyosaki’s words without knowing where he was coming from when he uttered those words, then, you’re just leading yourself toward the pit of frustration and doubt.

Kiyosaki predicts a market crash in 2016. That’s the reason why he is not in favor of long-term investing.

There’s another possible reason why he’s not buying the long-term investing method. His age, perhaps. The risk tolerance and sentiment of a person to either go long or short in his or her investments can be affected by his or her age. Kiyosaki is 69 years old (according to Wikipedia, he was born April 8, 1947).

Have you heard the “100 minus your age” rule? How’s that? Get the difference between 100 and your age to get the ideal percentage of your investments that should only go to the stock market (equities). For example, 100 minus 31 (my age), I get 69. That means 69% of my investments should be in the stock market. The remaining 31% should go in other investment platforms such as real-estate, bonds, and more. This is the reason why I said that age is another possible factor why Kiyosaki is pessimistic about long-term investing in the stock market notwithstanding his expectation of a market crash in 2016.

In contrary, I am optimistic about my long-term portfolio. This long-term position investing will become a legacy and a family culture.

Long-term position investing doesn’t stop by the time I reach 100 or when I die. I’ll pass this to my future generations.

But, let’s say Kiyosaki’s prophecy of a market crash in 2016 will become a reality. What’s my take?

As a long-term position investor, a market crash will always be a blessing to me. I only buy companies with products or services that people need for the long haul. I buy companies with a healthy track record not only in terms of financial results but also in terms of business management. I can take advantage of the default fearful and panicky reaction of investors to uncertainties.

The default action of uninformed investors is to sell when they are not sure on what to do. If they sold the companies I like, I’d be able to buy more shares at a cheaper price.

Easy? It’s that easy once you’ve decided to be solid in embracing the psychology in investing that you really like to follow for the long haul. In the game of investing, your psychology can be your friend or enemy. If you don’t know what you’re doing and what you want to do, you become your own detractor.

What do most investors do when there’s an uncertainty?

They sell.

They piggy-back what others are doing without even checking if they have the exact same investor’s profile or risk tolerance.

I know that no amount of psychological conditioning will stop people from panicking regardless if the market crash is just a rumor or a reality.

If you’re my client in the Stock Signals Philippines, I’ll focus on marinating your mind with how I see things so we’ll be on the same wavelength.

I’ve learned through some customers’ feedback that, in times of uncertainties, you want to hear my comforting words more than my fundamental and technical analyses. Perhaps, you already know what I’m about to say but it makes a difference and it helps when you hear it directly from me over and over again.

Because my long-term position investing psychology doesn’t end when I die, and because I only buy companies with those criteria I mentioned above, I don’t see a reason why I should fear a market crash. With due respect, I don’t see a reason why I should nod on Kiyosaki’s opinion.

We hope for the best. We prepare for the worst.

Jaycee De Guzman

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