New Book Alert: The Long Game is Available
My new book, The Long Game, is available now. The book contains reflections from 30 investors who’ve survived decades of market cycles. You’ll learn how to tune out the noise that makes you second-guess yourself, handle the fear and greed that hurt your decisions, and stick to principles that actually compound wealth over time. Click here to get your copy.
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I have been writing about long term investing for over fifteen years now. And for all these years, I’ve been writing some version of the same sentence.
“Think long-term.”
“Own businesses for the long-term.”
“The long-term takes care of itself.”
I have written it in newsletters, said it on stage, and most of all, reminded it to myself.
I still believe it.
But, over these years, I’ve also realised that I’ve been using it the way temple priests use mantras. The sound of it has done a lot of work that the meaning of it never quite did. And readers who have followed me for a while deserve to know what I actually mean when I use those two words (wishing myself good morning, fifteen years later!), because the gap between how the phrase sounds and what it asks of you is wider than I usually let on.
So here is what I mean.
1. I mean a horizon longer than the person who is buying.
When I say long-term, I mean five years at the absolute minimum, ten years for most decisions, and twenty for the core of a portfolio.
Now, twenty years is not a casual amount of time. Twenty years ago, I was a novice equity research analyst hunched over my keyboard writing research reports on companies I barely understood. My daughter was just two years old (she graduated from college just now). The Nifty was below 4,000 (it’s now around 24,000). The phone in my pocket today was unimaginable then, and the one in my pocket twenty years from now will be unimaginable now.
So, when I ask a 35-year-old to act on a 20-year horizon, I am asking them to commit on behalf of a person they have not yet become. That is the actual contract. The portfolio is not really being held by you. It is being held by a relay team of versions of you, each handing the baton to the next, and each one having different fears and different children and different aging parents.
This is why I keep saying the temperament matters more than the technique. It’s because while the technique stays roughly stable across those twenty years, the temperament has to keep regenerating.
2. I mean owning, not just holding.
When I say long-term, I do not mean “buy and forget.” I mean “pay attention to what you want to own, then buy, then pay attention to what you own.”
The difference is everything. Buying and forgetting may turn up decades later as a happy surprise, but it works occasionally because survivorship is kind to a few. It is like a lottery ticket.
Owning is different. Owning means I open the annual report every year, even when the stock has done nothing for three years and I am bored. Owning means I notice when the management starts talking differently, or when the auditor changes, or when the receivables rise in a way that does not match the revenue story.
Owning means I am willing to sell if the thesis breaks, and I do not treat selling as a moral failure just because I once wrote glowingly about the company.
A lot of people use “long-term investor” as cover for never having to revisit a decision. That is not what I mean. The opposite of trading is not holding. The opposite of trading is “thinking.”
Sometimes thinking leads you to hold for fifteen years. Sometimes it leads you to exit in year three. Both can be long-term investing if the thinking is honest.
3. I mean choosing what to hold with more care than how long to hold.
When I tell stories about long-term investing, I usually reach for the same handful of names. Asian Paints, Nestle, Pidilite, Titan, Marico, etc. We have all told these stories so often they have started to feel like proof.
They are not proof, but survivors.
For every Titan, there is an Onida, a Premier Automobiles, a Hindustan Motors, a Reliance Communications, and a Yes Bank. There are companies that retail investors held religiously for years, riding them down to near-zero with the same patience that made other people rich elsewhere. So the emotion was same, and the discipline was same, but the outcome was different.
So when I say long-term, I mean “long-term ownership of a business that deserves it.”
The phrase does not bestow magic on whatever you happen to own. It rewards quality, durability, honest management, and a moat that compounds. The absence of any of these is punished with the same patience.
Basically, holding is like a multiplier. What you are holding is the base number. A multiplier on zero is still zero.
This is the part of long-term thinking that most investors do not focus on, because “how long to hold” is easier to teach than “what to hold.”
4. I mean accepting the cost, not just the upside.
When I write about compounding, like everyone else, I often write about the upside. The chart surging upward, the back-ended payoff, the eighth wonder, etc.
But what I mean by long-term also includes the cost you pay for that compounding. And the cost is not in financial terms.
The cost is the conversation with your spouse in March 2020 when the portfolio is down 40% and she asks, quite reasonably, whether you should not just move everything to FDs. The cost is the friend at a dinner in 2023 who has tripled his money in small-caps while you sat patiently in your boring large-cap quality names. The cost is your father asking why you have not booked profits, year after year, with a tone that suggests he has stopped believing you know what you are doing. The cost is the weekend you spend writing a note to yourself about why you are still holding, when really you are just trying to convince yourself not to sell on the next trading day.
None of this shows up in the CAGR calculations. But all of it shows up in whether you actually make it to year 20.
5. I mean lived experience, not declared intent.
When I say long-term, I mean something that has been tested in your own life, not something you read about.
A 20-year holding period is not 20 years of patience. It is roughly 5,000 trading days, of which a few hundred will be genuinely awful, a few thousand will be boring, and a handful will be euphoric in ways that tempt you to do something stupid.
The long-term sold on newsletters and YouTube videos is a smooth curve. The long-term you actually live through is a jagged and frequently humiliating experience where the gap between what you said you would do and what you did keeps widening.
Some people are wired for that. Most are not, at least not at first. The wiring is acquired by living through one full cycle, then another, and then another. And if my experience is anything to go by, the first cycle teaches you very little. The second teaches you a bit more. And by the third cycle, you are finally an “investor” (or a philosopher!).
So when I say long-term, I mean “I have been through this before, and I will probably be through it again, and I know now what I tend to do when the floor beneath me disappears.”
That self-knowledge is the real asset. The portfolio is just the place where it gets expressed.
So, what does “long term” really mean?
To me, it means:
- Horizon long enough to make the noise irrelevant,
- Ownership mindset that survives boredom,
- Obsession with what you are holding rather than how stubbornly you can hold it,
- Honest accounting of the cost in your life and not just your spreadsheet, and
- Temperament that has been tested at least once by reality and not just by reading.
That is a lot of burden that these two words carry. Which is why, I think, the phrase keeps getting used as a slogan, simply because slogans are easier. The actual practice does not fit anywhere except in the slow, unspectacular life of someone who keeps showing up to it for years on end.
So, that is the phrase. That is what I mean. And on the days when I forget what I mean, this is the essay I will come back to read.
New Book Alert: The Long Game is Available
My new book, The Long Game, is available now. The book contains reflections from 30 investors who’ve survived decades of market cycles. You’ll learn how to tune out the noise that makes you second-guess yourself, handle the fear and greed that hurt your decisions, and stick to principles that actually compound wealth over time. Click here to get your copy.
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