In this blog post, we’ll explore the right way to practice long-termism and discuss wise criteria for determining when to sell.

How to realize investment value from a long-term perspective

Have you heard the term “long-termism”? As the name suggests, it refers to an attitude that prioritizes a long-term perspective. It’s a concept that’s gaining increasing attention not only in investing but also in various life decisions. So, how can you truly practice long-termism and expect solid returns over the long haul?

Cultivating a long-term mindset is the starting point

The core of long-termism lies in achieving long-term, stable value recovery. You must not be swayed by short-term market fluctuations; instead, you should select assets that align with your investment philosophy using a long-term perspective and consistently pursue returns.
To do this, one principle is crucial: do not buy impulsively or give up easily. When making an investment decision, you must thoroughly review your options and choose assets suitable for long-term holding. “Making the right choice” is the key to preventing short-term losses and securing long-term returns.
For example, if you are focusing on the growth potential of the science and technology sector, it is advisable to select a few leading companies in that field and hold them for the long term. The same applies to the consumer goods sector. Including companies that can be expected to generate steady returns in your portfolio and holding them for an extended period constitutes a stable investment strategy.
The reason for diversifying investments across multiple companies here aligns with the asset portfolio strategy discussed earlier. As a strategy to diversify investment risk, the same principle applies to fund investing. Selecting a few funds you trust and managing them over the long term is the very first step toward long-termism.

Long-termism is not about “leaving things alone”

It would be a mistake to understand long-termism simply as “holding on for as long as possible.” A passive attitude of simply washing your hands of it and standing by is not true long-termism.
Warren Buffett is often called the epitome of a long-term investor, but he, too, demonstrates the decisiveness to flexibly adjust his investment strategy depending on the situation. For example, in early 2020, as COVID-19 began to spread in the U.S., he firmly stated, “I will not sell airline stocks.” However, within just a few weeks, news broke that Berkshire Hathaway, led by him, had sold an 18% stake in Delta Air Lines and a 4% stake in Southwest Airlines, and at the May shareholders’ meeting, he officially announced that the company had divested all holdings in the four major U.S. airlines.
He explained it this way in an interview.

“From the airlines’ perspective, the world has changed. But I don’t know how it will change. There will undoubtedly be industries that suffer a fatal blow during the pandemic. Unfortunately, the airline industry is one of them. The scale of the losses has exceeded what they can control.”

As this example shows, long-termism is based on assessing the situation and constant reevaluation. It is not simply about holding stocks for the long term, but about continuously making judgments based on long-term value. As Buffett said, if you’re on the wrong path, it doesn’t matter how fast you run. Rather, the courage to boldly turn away from that path is the essence of long-termism.

When is the right time to sell stocks?

So, from a long-term investment perspective, when is the most appropriate time to sell stocks? I suggest two main scenarios.
First, if you need funds immediately
The ultimate purpose of investing is to improve one’s life. If you are currently facing financial difficulties, it is advisable to boldly withdraw your investment funds and use them to enhance your quality of life. No matter how large the investment returns may be, if your current life is filled with hardship, those returns are meaningless.
Second, when there is a change in the fundamental value of the investment asset
If you determine that the asset is no longer likely to generate returns in the long term, you must immediately withdraw from the investment.
For example, if a company’s performance continues to decline, key personnel leave, the industry structure undergoes rapid changes, or government regulations tighten, these developments can negatively impact the company’s future value.
The key point is that even if such changes occur immediately after purchasing the stock, you must make a decision without hesitation. This is not a betrayal of long-termism; rather, it is the very process of practicing long-termism. Whenever a company’s fundamental value is shaken, that very moment is the time to sell.

How to Respond to Long-Term Value Changes

However, in reality, it is not easy to constantly monitor and assess the value of your investment portfolio. Especially for individual investors, it is difficult to track every minute change due to limitations in time and information.
In such cases, an alternative worth considering is an “index fund.”
Index funds track major market indices such as the KOSPI or S&P 500, and are structured to pursue returns in line with the overall market trend. Since they reflect the growth of the market itself, they offer the advantage of reducing the risk associated with individual stocks. They are particularly suitable for beginners.

Long-termism is a philosophy that can be applied to all aspects of life

Long-termism is not limited to simply being an “investment philosophy.” It can also be applied to major life decisions such as marriage, job hunting, and starting a business. For example, if you are looking for a new job, you should examine whether the company has a structure that allows for long-term growth. Consider the following points:

Does the company align with current trends?
Does it possess proprietary technology or core assets?
Is its structure focused solely on short-term performance?
Are its welfare programs and organizational culture stable?
Are its relationships with business partners sound?

As shown above, long-termism can serve as a crucial criterion for decision-making across various areas of life. When we make choices based on a long-term vision and the potential for sustainable growth rather than immediate gains, we can build a more stable and meaningful life.

In Conclusion

Long-termism is not simply about “enduring patience.” It is the ability to constantly evaluate situations from a long-term perspective, respond flexibly, and make careful choices. Long-termism holds the power to transform not only your returns but also the direction of your life.
Are your current investments and choices truly grounded in long-term value?
This very moment could be the first step toward practicing longtermism.
Cultivate the ability to see a little further and a little deeper. That perspective will ultimately make your life more resilient.