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There is a lot to gain by thinking long-term

The first thing that investors need to do is look beyond short-term. Most people focus on what is going to happen a few days down the line, writes Arnav Pandya.
Hindustan Times | By Arnav Pandya
UPDATED ON JUL 04, 2008 11:22 PM IST

The first thing that investors need to do is look beyond short-term. Most people focus on what is going to happen a few days down the line and then they concentrate their full attention here. They do not seek to look beyond this stage but there are a lot of opportunities present in the market for those who are willing to do just this.

There might be a longer time frame for things work out in such a situation, but an investor would be rewarded for his patience.

Sticking to trends

There are many investors who just follow the trends in the equity market. This means investing in real estate stocks when they are hot or going in for engineering companies when they are doing well and so on. They do not look at the other opportunities in the market.

While there can be gains when such a strategy is followed, there can also be a grave risk in the position. If the trend suddenly changes, then the investor could be left with an investment that they do not want and more importantly something that they do not understand at all. The financial loss is an additional hit.

Look beyond tomorrow

The other thing that happens in the market is that with such a large amount of people and noise all around, the thinking becomes short-term. This means that the investors will just look at what is going to happen tomorrow and not what will be the situation a few years from now. People are less willing to look at long-term potential, but will concentrate on what is happening at the moment.

This will also mean a situation where the talking point in the market changes very quickly and can be a dangerous thing for investors. They cannot keep changing their investment decisions overnight because there is a need for stability in this area. That is the reason why the investors need to break out of this mould and look for better opportunities.

Risk element

Investors should not forget that the risk element would also change when they make the difference with long-term investment.

The risk will arise by way of the investment not performing as per expectation or it could be that the market continues to ignore such chances in the midst of looking at short-term gains. This risk is different than the one where the investor is caught in a position where they cannot get out of an investment quick enough before the tide turns.

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