To invest long term, we need to have faith

Whatever you do, if you intent to stay long term, you have to have faith. Marriage, work, career, hiking, practising, investing. It is very easy to lose focus and sway away if you do not have strong faith.

You have to believe in something. For investing, if you do not have faith in China, you would have given up on China after so many years of dismal China stock market performance. Those have faith understand that dark will be followed by dawn. The longer the dark is, the nearer the dawn is. They believe that China is progressing and will continue to do so in gradually opening up, and this is a no returning path until China fully achieve its full potential. And they believe now is still the early day. Only this kind of faith will enable them to invest long term in China.

Those who can invest long term in company, private or public, must have faith in the company business and people. So much so that they will not withdraw their investment when the company is in crisis mode or making losses. If it is a private business owned by your family members and relative, or you are one of the founders, you probably have the faith to succeed and failed together. If you are investing in public company, your faith is more easily shaken when bad thing happen. To invest long term in a public company, you have to believe the management team has the reputation of responsibility, accountability, and capable to drive the company forward to greater height, the company must have the unique competitive strength and able to innovate over a long term period. Although that was base on historical track record that cannot guarantee future success. That is the only thing we can rely on to believe in. For a safer consideration, the company must have good hard asset which is demandable and can expect to generate sustainable profit, and you believe that the management is acting in every possible way in favour of shareholder.

Hence, if you are doing your own investing, to have faith, we have to understand the economics, the business, the people, and have the interest to continue follow the news. It is normally very hard if you are not familiar with investing. All people are busy doing their own work. They normally rely on other people to give them investment advise, hire a financial advisor, or invest through professional fund management company. However, even that, they have to have strong faith in their friend who give the advise, to the financial advisor who serve them, or to the fund management company. If they do not have strong faith, when their investment performance is not satisfying, they will just sell and lose faith. They may lose faith on their friend's advise, lose faith in financial advisor personnel, lose faith to the fund management industry. They might even stay out of investment and become conservative. But for those who are not so extreme, they will switch between financial advisor, switch fund management company, listen to other friend advice. Their investment will never long term. They are happy and buy when the investment rise in value, and sell when the market is bad. Or they close their eye when the investment turn bad, not trying to understand what happen.

To be success in everything including investment, we have to go through high and low, knowing what to do in each cycle and occasionally adjust our strategy. We have to know our direction clearly, have full faith that we will reach there. Then we have to sail through every high and low before we can reach our destiny.