Fads will always fade
With the monsoon rains fast spreading around us, what would you reckon is the best investment to be in? A simple, no brainer choice would be the business of selling umbrellas. Every year, around this time, one would read about how an umbrella maker is innovating to draw more business and how it is raking in the moolah for his company? Imagine being invested in such a business! You would make the most monies around the time monsoons set in and start to spread. But, in the long run, this may not be the best business as our investment horizon extends. After the monsoon ends, demand for umbrellas would dip sharply. Seasonality is always short lived and most decisions centered around it would end up as bad trades. Investing needs to be fashioned over a much longer horizon. Thinking needs to be long term oriented and decisions must be far sighted. Investing now must go beyond the immediate. To do that one must think beyond now and show much deeper conviction.
“There is only one way to describe most investors: trend followers.” – Howard Marks