Our favorite holding period is forever. – Warren Buffett –
Our average holding period has come down to a Year and eight months because of our recent purchases. Prior to that, our average holding period is four years.
Four years seems like a long time, but in investing it is a short time.
Here is the detail below.
|Company||Initial Purchase Date||Holding Period (YY.MM)|
|JP Morgan Chase||1/16/2020||0.9|
|Bank of America||3/6/2020||0.8|
|Average Holding Period||1.8|
|Average Holding Period Prior to COVID-19 Purchase||4.0|
We purchase more of those companies after our initial purchase if we think it is worth more, and if we think otherwise, we sell.
Warren Buffett said that it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful.” And we listened him.
We took bold actions to buy stocks when there was blood on the street in March.
In addition, we also made two unprecedented mistakes this year. Despite us trying to be prudent about our action, we enormously failed to judge and take a right action. We failed to take “No Action” in this case.
In brief – First, we though we made a good shift in January when we sold portion of our holding in Alibaba and bought Berkshire Hathaway and JP Morgan Chase. Just two months later, our shifts (perhaps emotional rather than rational) turned bitter when Alibaba took off while Berkshire Hathaway and JP Morgan took a dive due to COVID-19.
Second, we misjudged the severity of the pandemic and bought Boeing and Delta in the middle of march. Shortly thereafter, we reevaluated our holding and sold them in painful loss because their earning power has gone down so much that we thought its not worth to hold on to it. Six months later, to add salt to our wounds, they both trade above our initial purchase price.
Famous scientist Blaise Pascal said “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.” This plainly explains what happened to us.
Had we sit tight in both the cases, we would be far better off, financially and emotionally.
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Why are we so vocal and transparent about our holding?
Our sole purpose of us sharing our dear holdings is to learn and let learn.
We, sadly, are under-performing overall market for a long time. This phenomenon has suddenly changed when we started writing about our investing philosophy. And we continued – to write and to beat the market.
I am pleased to announce that starting this year we are beating the S&P 500 index. More on this in our future post.