An interesting question came up on Twitter: if the stock market were to close for 10 years now, which of the companies in its portfolio would do best?
Investors are having quite a lively discussion in Some, and the answers to this question began to rain down. Favorites seemed to be at least Apple, Tesla, and Facebook, as well as Alibaba.
Of course, other favorite companies are interesting, but more thoughts aroused that period. Ten years already requires quite a long loan to the company. Or is it even such a long time after all?
Only the active can win?
There are a lot of beliefs attached to investing that leading investors in their own opinion are happy to reinforce by showing off their analyzes and right-handed (semi-accidental) trades. The best investment style in this bubble is seen as active trading, which means that money must be constantly transferred from one investment target to another and the stock market must be monitored relentlessly, otherwise it will fall out of the sled!
This active bustle is time and effort-consuming – and it’s also a little questionable whether constant buying and selling yield it better than a lazy investment style. Fewer regular traders tell about their past stores and wasted assets in Some. Also, few of us know the noble skill of timing, with which trades are always made at just the right magical moment. The more you trade, the more chances you get misled.
Therefore, it is advisable to lift the passive placement on the stand as well. Consider, buy and hold!
Buy one that doesn’t rub on the shoe
Even before making investments, it is worth exploring the landscape and motivation of your soul. What kind of things and companies do you consider good and valued – what kind of activities would you like to continue? When you only acquire companies or funds in your portfolio that your conscience doesn’t constantly knock-on, it’s nice to continue the journey together with them for the next ten years, why not for long.
A responsibly investing look and expectations are often just far from the horizon. Responsible companies are chosen for their portfolio precisely because they are expected to achieve good things in the future as well. And this doing good things rains both in the owner’s laurel and as a common good for society and the environment.
Also, responsibly operating companies are more likely to be up and running in decades to come. Why would a company want to crash into its portfolio before 2030, distressed by its computation or by legislators?
It would feel weird to carefully select responsible companies, invest in them and sell the shares next week. Why would you do that? Active crunching with portfolio content (let alone shorting or other speculation) doesn’t sound like a very responsible investment in my ear, but a traditional and short-term investment where the only motivation is to seek a return. Five that the fence will fall and others may hurt.
Responsible investing requires and rewards
If you want to make responsible investments, you should be prepared to spend a little of your time on it as well. If you are not familiar with the contents of a fund advertised as responsible or understand the company’s operating logic, you will not know what you own. If excluding the worst is enough, make sure you don’t buy companies that make tobacco and grape bombs. If you want to peel a responsibility cream, you have to work harder. On the other hand, this effort can also be rewarding, especially decades from now.
Responsible investing can be a way to calm the pace, make longer-term decisions tomorrow, and commit to your own decisions and the companies you own. Responsibility as a selection criterion makes it easier to delineate companies and also to stick to your investment plan, no matter how turbulent in the market.
With this, in the portfolio of a responsible investor, all the companies are those with whom it is comfortable to ride towards sunset. In a Twitter conversation, it was stated that “probably many would avoid buying shit for the portfolio if it had to be kept there for 10 years.”