#268: How long is long-term?

Simon Shares

• Taste (JSE code: TAS) couldn't get the public to take up all of the 120million new shares, but a new shareholder of note did and it good news for the company.
• Naspers (JSE code: NPN) results talk of core HEPS. Now sure they tell us what 'core' means but as always I very skeptical of anything that is not IFRS.
• Wescoal (JSE code: WSL) results in part really hit it out the park with production up 82% while IFRS HEPS was 11.3c vs. 27.1c (company HEPS excluding BEE deal costs).
• Lafferty Group's 2017 Global Bank Quality Benchmarking study is out, it ranks 100 major quoted banks across 32 countries and Capitec* (JSE code: CPI) comes out tops as the only bank to get five stars.
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* I hold ungeared positions.

The problem with buy and hold is not the math, which proves it works.

The problem is with the evidence, which proves investors can't do it.

— Bob Brinker (@BobBrinker) June 27, 2017

How long is long-term?

A recent question asked about some investing ideas and concluded with the comment that "I'm looking at long-term say 5 years.". Wow. For me five years is short term while long-term is decades (yes with a 's' at the end).

I am not falling into the trap of saying things are faster these days with always on smart phones with taxis at our beck an call and online derivative trading. But the tweet below highlights that while we know long-term buy and hold works excellently, especially with ETFs, the average investor finds it hard. Stats continually show that average holding periods for stocks has been rapidly reducing. On the NYSE it is now months whereas it used to be years and years.

I'm not sure if it's fear, impatience, indecision or just a greed to be rich quickly. But wealth creation takes time and sure it is no fun when over the last three years most local portfolios have returned nothing, only beating money under the bed.

What I do know is that thinking of a few years as long-term is bad.

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• Dale
  • I understand the logic behind an equally weighted ETF, and why it *should* be a good thing, but I can't help wonder if it's not a case of "in theory, but not in practise". If I compare the performance of the CSEW40 to the plain Satrix 40, without exception over an almost 10 years period, the Satrix 40 outperforms the equally weighted 40 – sometimes really significantly (thanks etfSA for the data).

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