Decades can happen in months sometimes

Imagine a stock that stays within a limited range for ten years. Investors who put their money into it might start to feel bored or frustrated. During this time, the stock doesn’t seem to perform, even when other stocks are rallying during a bull run. The stock’s performance remains flat, and it’s easy to lose hope. Many investors might decide that this stock is “no good” and choose to ignore it.

The Unexpected Rise

After a decade of waiting, something unexpected happens. The stock, which had been ignored for so long, suddenly starts to move up. At first, only a few investors take notice, and as the stock climbs, more and more people begin to invest. The stock continues to rise, but then it experiences a sudden collapse. This sharp drop can shake the confidence of those who had just started to believe in its potential. However, this drop is short-lived. The stock’s trajectory changes again, and it begins to climb even higher than before.

A Steady Climb to Success

As the stock continues to rise, it keeps going up without looking back. It defies the expectations of many who thought it had reached its peak. Some investors might have given up, thinking it couldn’t go any higher, but the stock proves them wrong. In just about a year or so, the stock goes from ₹1,000 to ₹7,000, a sevenfold increase in a short period. This kind of dramatic rise was something no one could have predicted. However, those who followed a disciplined strategy based on price action would have stayed invested and reaped the rewards.

The Importance of Strategy

The story of this stock highlights the importance of sticking to a well-defined investment strategy. If you had followed a discretionary approach, you might have sold the stock much earlier, perhaps at a 50%, 100%, or even 200% gain. While these gains might seem significant, they pale in comparison to the potential returns that could have been achieved by holding on. By selling early, you could miss out on the opportunity for substantial gains, as the stock continues to climb higher.

Lessons from a Decade of Waiting

This example also teaches us that there can be long periods where nothing seems to happen with a stock. You might wait for years without seeing any meaningful gains. But then, in just one year, the stock can deliver returns that are worth more than the entire previous decade. This is why patience and a long-term perspective are crucial in investing. If you stick to your principles, strategy, and framework, you increase your chances of being in the right place at the right time when the stock finally takes off.

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