Psychology

Short term success, long term failure

If you were given two choices, which would you pick:

  • Short-Term Success with Long-Term Failure
  • Or Long-Term Success with Short-Term Failure

The answer is easy, isn’t it?

Which idiot would pick short term success if he is going to fail in the long run?

Unfortunately, most market participants, especially newcomers are constantly searching for quick money and quick success.

And it is this very nature of chasing short-term success in stocks, which will result in heavy losses.

Short Term Success Long Term Failure

I am a part of a few Telegram and WhatsApp groups. I read a few messages every day just to get a sense of what other people are doing.

If they are too excited about investing money in stocks, it’s time to be cautious.

Today I read a message of a person who is fully invested in just two sectors – Sugar and Metal. He says he has invested 20% of his money into a company called ‘Rana Sugars’.

This reminded me of those days in 2016 when ‘Rana Sugars’ and ‘Ugar Sugars’ were the two most popular stocks in the MoneyControl forum.

Almost every newcomer was buying it. The end wasn’t pretty, almost everyone lost their hard-earned money.

A few minutes later, I got a message from a cousin, who was just beginning his journey in the stock market. He asked me if I was invested in a company called ‘Ksolves’.

I hadn’t even heard the name. He said the share price was “jumping like a Kangaroo since November 2020”.

Notice the trend? A bull-run accumulates a lot of new market participants. As it progresses, they gain more confidence. In the end, they are dumped. Their hard-earned money is taken away from them before they even understand what has happened.

The end result can only be one of the two; They leave the market forever, or learn lessons the hard way.

And the biggest lesson they learn is – the stock market is a long-term journey of 10-20-30 years.

Consistently compounding your money at 15-20% a year is much better than trying to double your money from one stock in quick time.

Many people do not understand how big ’15-20%’ actually is.

Let’s say you invest ₹ 10,000 every month in quality companies. If you can compound at 15%, in 30 years you will have stocks worth ₹ 7 crore.

But let’s say you go a step further. You gain experience, become a skilled investor and put your life into the market. Then, you could compound your money at 20%. This will give you a portfolio of ₹ 23 crore in 30 years!

All with consistently investing 10,000 per month. As your income grows, you can invest more. This will help you reach bigger goals in shorter periods of time.

But the focus should always be on consistency and long-term success.

This is applicable for every kind of stock market participant. Whether you are a trader or investor, you need to survive in the market for a long period of time to make money.

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