Buying and owning a share is like going through a relationship cycle. In a modern day homo sapiens social relationship, the commitment level between and man and women can differ at different stages in their life. Most (>80%) would prefer to have long-term relationship goals after 35. Before 35, its all about youth, energy and YOLO-ing.
Buying and owning a share is similar to relationships in your early 20s compared to the relationship in your late 30s. In your early 20s, there may be more men or women walking through your front door. You are simply exploiting your youth, experimenting and understanding each need. As you grow older and wiser in your late 30s, you perhaps know exactly what you want and settle down with somebody you love more than you love yourself. There is no right or wrong but the experiences of life and the key profit be happiness.
Starting an investment is the same. You do not know everything about buying, selling, investing and trading until you have tried all aspects and experience the joys of winning and the sorrows of losing on a bad decision. Its always best to learn investment at a younger age as you have time to recover from high-risk losses. Again, there is no right or wrong but the experiences of investment and the key profit are financial freedom.Let
Let me begin by explaining the difference between two type of shares we must encounter in order to learn, profit and gain experience towards the later stage in life.
One Night Stand Shares Versus Long Term Relationship Shares
Example of a One Night Stand Share ownership.
In July 2017, Lufthansa airlines had a slight correction which causes the share to drop 12%. I bought the shares at a low 10.10 euros. I must explain that I do not believe in airline shares simply because airlines are high margin type business and no one pays for expensive airlines anymore. However, this German airline company is the heart of European travel and I was willing to buy for short term for a quick profit.
I wrote on my Evernote that I will leave once the share gains 25%. Between July 2016 to November 2016 the share soared 25% and I sold to reap my profits.
Looking at today’s share price I would have gained almost 200%!!!
I do not regret it at all. Simply because I do not invest in airlines shares. I cannot sleep knowing the fact that the airlines may receive some bad news to cause the shares to plummet. If I did hold it longer, I am sure I would have sold it at 40% max.
So this LHA.DE shares in 2016 are classed as my ONE NIGHT STAND SHARE. I go in when its low and vulnerable and capitalise what I need and go.
Example of a Long Term Relationship Share.
I love Apple products. It’s an engineering technological in an art form. I invested heavily in Apple back in 2014/15 when it was hovering above $120. When it started dropping to low 90s, I didn’t sell any of my original shares. Instead, i bought more each time I have enough cash from my savings. In doing so I was lowering my average per share. She shares took about 2 years before it grew to 140 and I bought more of the shares with available cash.
Apple is my long-term partner. I invest alot of time and money in the company to ensure it grows and release new products. I trust this relationship and willing to sacrifice my hard earn cash for a future value return.
Now Apple sits at almost $170 per share and the largest holding in m portfolio. I do not listen to the short-term news or issues with a shipment of the iPhone X. End of the day 40% of the mobile phone market wish the had one.
I hope to invest more in Apple to push future artificial intelligence as well as self driving cars. I hope they improve SIRI and make is as attractive as Alexa. I am still loyal to SIRI even though it doesnt understand my scottish accent.
Everyone needs a mix of One Night Stand Shares to ensure you have risk profile to reap rewards such as multi-bagger. However, they have to be disciplined enough to understand when to leave. One night stand shares does not necessary mean high risk shares. It could be Facebook, VW, Wells Fargo blue chip shares which you don’t normally trade. These shares always gets media exposure or scandal attacks which temporarily brings the share price down and then normalised after a cooling period.
Depending on your age your risk profile would change. If you are in your mid-20s you should own less than 25% long-term shares which have traits for high potential dividend growth and dividend reinvestment potential. When you hit your late 30s then these long-term shares should grow up to 40% to be more defensive
So when you review your current portfolio you need to know what are your one night stand shares versus your long term relationship shares and stick to the plan!