What is the long-term outlook on the stock market?

Long-term investing in the stock market is important because sometimes in the short term (a few days to 3 months) or medium term (3 to 6 months) the stock market trend and your stocks are negative and you have in fact or lost Or your profits have been significantly reduced, and the best way to make a profit on the stock you buy is definitely to look at the stock market in the long run . In order to teach the principles of long-term investment in the stock market, we must first know what is meant by long-term in the stock market ? Long-term on the stock exchange means from 6 months to a few years, which means that you buy a share of steel, for example, and do not sell it for a year, and sell it after a year, and this means that you are a long-term shareholder. You have been a steel company.

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Long-term investment in the stock market

Stock market experts often advise people to invest in the stock market with a long-term view and to avoid short-term fluctuations in the stock market, especially when traders have just entered the stock market. Most people who have entered the stock market with a long-term view have also achieved acceptable returns unless they have made a mistake in choosing the right stock. Investing in the basic stocks of the stock market such as Shasta, Fars, Shepna, Shebandar, Vaghdir and… in the long run will definitely bring good profits for investors and this profitability will reach the highest percentages when careful selection of shares We have done and with patience we can make a good profit from them and we do not need to always be on the system and monitor the stock market.

In this article, we want to examine the principles of success and long-term investment in the stock market and the benefits of having long-term goals in the stock market. How to choose a stock market and long-term investment in the stock market can be very profitable for investors, as long as you consider the principles of long-term investment in the stock market.

Long-term in the stock market means how many months?

Investment with a vision of more than 1 year is usually called long-term investment. Of course, many professors believe that investments over 5 years are a long-term investment. But given the current state of the stock market and the unprecedented fluctuations in all stocks and the like, I tell you I mean the long term in the stock market is between 6 months to 10 years, and if you can see this investment horizon Strengthen yourself, a profitable future awaits you.

Principles of long-term investment in the stock market

1) The first and most important principle of long-term investment in the stock market is that even in the best of circumstances, for reasons such as lack of access to confidential information, the price of the purchased share may decrease or its value may decrease, so if the capitalist If the transition is planned in the short term, it may be forced out of the market in these circumstances.This will deal a big blow to the stock market and even the investor, both in terms of financial issues and in terms of psychological effects, in which case the investor makes hasty and wrong decisions and ultimately does not get the desired result and the market It will be shocking that we are currently witnessing this issue in the stock market, but with long-term investment in the stock market, you will no longer have the stress of devaluation in the short term and the investor will simply and easily wait. The future remains and the short-term period does not see the need to liquidate the investor’s capital.

2) When the market is oriented towards short-term capital, people look for companies with more fluctuations in order to make more profit, so that they can make more profit, and this causes people to pay attention to companies. Large and reputable, which also have acceptable financial support, should be reduced, and small companies that have nothing to say to large companies should make a profit on a temporary basis and be made big.

If we look at this issue from another perspective, by welcoming investors from small companies and less credit, reputable companies will also have to spend more time and capital to support this stock exchange, and their main goal is to meet the needs of the people. They move away from the market for goods and services, and eventually their stocks will lose their true value without their intervention, and eventually other markets will be affected due to the increase in liquidity in the capital market. This model of companies is losing two markets. Of course, the important thing to keep in mind is that managing two markets is not a very simple task and the market directions in each of the two are influential.

3) Various factors affect the stock market, one of which is the political situation in society. When the political situation has a negative effect on the stock market, most stocks that have less intrinsic value will be most affected, which, if the investor had a long-term view, would lead to stocks with more intrinsic value. And cross-sectional fluctuations should not be considered too much by the investor.

4) Those who are thinking of fluctuating in the stock market should note that in each purchase and sale, an amount is deducted from your capital as a tax for the organization and the broker. Of course, if you think that investing with a short-term view will bring you more profit, you can add up the number of transactions and interest paid, and check all the conditions for keeping the share in the long run, and then this Compare the two. Keep in mind that with a short look at the stock market, the daily conflicts and risks imposed on you will increase and the level of calm in this situation will not be very good.

5) According to the first case, usually when a long-term decision is made, the appropriate value-added stocks that have been acquired in the past are selected and usually temporary and possible changes in the stock market do not have a bad effect on this model of companies. And they are not easily vulnerable and will often heal in the long run, even if they are injured. For example, suppose you have invested in a stock for a short period of time and the basis of your decision is only daily returns and volatility and you have considered the intrinsic and real value of the stock, so you do not have a decision to sell on time and in If the situation changes and the value of the stock decreases and eventually a sell queue is formed, you will even have trouble cashing your capital in those stocks, which is the worst case scenario for investing!

6) When you choose companies with a long-term vision, that is, you no longer want to invest elsewhere with this money in the long run, now in the meantime there are situations where you in the short or medium term You can exit the market with a good profit and in this case you will sell your share calmly. In other words, you can have long-term planning and leave the market with less peace and risk, even in shorter periods of time, such as short-term and medium-term, so always invest in the stock market with a long-term vision and Decide to sell in the short term.

7) In principle, we become shareholders so that companies can grow and survive with the financial support of small capital, and to do this, use all their efforts to provide more shareholders through the profits from the investment and the provision of desirable goods and services. Attract customers.

What stocks should we buy for the long term?

Check the reasonableness of the stock price
The extent of the company’s ability to return capital
Investor satisfaction with reasonable share price
Examine the revenue generation of the stock exchange company
It is good for stocks not to be affected by fluctuations too much
Buy shares of a company that cares about your profits

Benefits of long-term investment in the stock market

Ease of long-term investing in the stock market for everyone: One of the biggest benefits of long-term investing in the stock market is that anyone can do it and does not need special experience and skills. In fact, you do not have to be a Warren Buffett to collect a good basket and keep it for 10, 20 or 50 years. Sure, you would not be completely wrong, but do not worry, even the biggest investors made a mistake a third of the time. With a long-term investment strategy, you no longer have a problem learning different trading styles, platforms, analytics tools, etc., because you are no longer an active trader.

Investors are weak market timers: One of the fundamental and inherent flaws of investors’ behavior is the tendency to emotions. Many people, considering the benefits of long-term investment in the stock market before the stock market crash, consider themselves long-term investors, but in the event of a crisis, they withdraw their capital for fear of further losses. Many of these same investors are no longer able to buy those stocks at the beginning of the stock return period and the beginning of the market reform process, and withdraw when the most gains are made. This behavior of buying at a high price, selling at a low price, is the most risky behavior that can drastically reduce the return on capital of individuals. Those investors who pay too much attention to the stock market want to reduce their chances of success by spending too much time in the market, and making a series of trades. If a simple strategy of long-term buying and holding of stocks leads to much better results.

Lower Capital Gains Tax Rate: An investor who buys and sells a stock within a year receives dividends as normal income. Depending on the individual’s adjusted gross income, this tax rate may be as high as 35%. In case of profit tax from the purchase of a stock that has been purchased for more than one year, it is a maximum of 20%. Investors in the lower tax classes may even be eligible for a zero percent tax rate on their long-term investments. This is one of the most important benefits of long-term investment in the stock market.

Reduce brokerage fees: When you are an active trader, brokerage fees play a big role in your overall income. Short-term traders spend millions of tomans every year to pay their trading fees. One of the benefits of long-term investing in the stock market is that you end up paying a commission once or twice a year to increase your stock. You do not have to worry about paying this fee at all, because the profit from keeping these shares will cover the expenses paid for the commission.

You escape the ups and downs of investing in the stock market : The stock market is a kind of long-term investment. This is partly because sometimes 10 to 20 percent of a stock’s value falls over a short period of time, and this is by no means uncommon. One of the most important benefits of long-term investing in the stock market is that investors can reduce the impact of such fluctuations and improve their stock returns in the long run. Investors who choose a long-term strategy in the stock market, choose a period of several years, or even several decades to make very good profits.

Statistically, high-risk stocks have higher returns than their low-risk counterparts. Looking at stock market returns from the 1920s to the present, we find that foreign exchange investors have not suffered significant losses over a 20-year period. Even with problems such as the Great Depression, Black Monday, the technology and financial bubble, etc. on the New York Stock Exchange, investors were able to maintain their maximum profits after 20 years. Although the results obtained in the past will not guarantee a high return on the long-term outlook on the stock market in the coming years, they will show that if stock is given enough opportunity, it can lead to positive results.

Combining things will benefit you : Buying stocks for the long term will allow you to reinvest your profits over time to create more profit potential. Time is your greatest friend as an investor. Even if your stock grows only 3% and this growth is added to the amount of your investment, there will be no major difference in your final capital. For example, earning a 3% return, assuming the stock stops growing or profits, will double your capital every 33 years. If you increase your investment by buying more of the same stock, your capital will almost double in less than 10 years.

Sleep well at night: Another advantage of long-term investing in the stock market is that it allows you to sleep comfortably at night. If your stock falls one day or rises rapidly the next day, you do not need to wake up early every morning to decipher the reasons for the fluctuation. If the companies you have selected for investment are reputable companies, the fluctuations are temporary and the overall trend will be upward.

Correcting your mistakes is much easier: Remember what we said about the possibility of mistakes for everyone, even big investors? One of the most important benefits of long-term investing in the stock market is that it allows you to correct some, or even all, of your mistakes. Of course, this does not mean that you always make a mistake and buy the shares of any company without knowing and staying in it for a long time, but it does mean that you should buy shares of companies that have grown strongly, or business models. They are still intact and have been in a temporary crisis for a while, identify them and get into stock. By using a long-term investment strategy, you can eliminate most of your investment mistakes and become a complete and low-error trader.

Regarding long-term investment in the stock market, we usually hear that investors should look at the capital market for a long time and reduce the excitement in the capital market, and with a little patience they will realize that the return of the capital market is better than other markets.