Myths about long term Investing

Successful investing involves two basic area of distance
1).what to buy and sell.
2). When to buy and sell.

It is not how much you make money that counts, it is how much you manage not to lose.

Let's start considering real time example,

Nifty had made a all time high on 20th January 2020 at 12440, then the market started falling, bear market started with the news of spread of Corono Virus, and index down to the low of 7550 on 23rd March 2020 almost a loss of more than 40%. Today the market has risen almost to 9600 from 23 rd March lows that is nearly more than 20% from the lower levels.

Where did the long-term investor (Buy & Hold) stand at this point ?
Very much still nearly 25% down from the January high of 12440.

To make up any loss taken in the stock market you have to achieve greater percentage gains than such  losses entail.

For eg.
 if you lose 40% of the value of an asset you have to make 50% on the reminder to make it break even.

So capital preservation is by and large more important for successful long term investment than securing an Occasional large profit.

-------------------------ManojKumar @markettoday