"Long-termism" is not about holding for a long time, but about choosing the right one.

“Long-term holding” is probably the most widely circulated and deeply misunderstood phrase in the investment community.

Many people interpret it as a stance: buy and hold, regardless of fluctuations, trusting that time will provide the answer. This understanding may sound reasonable, but it actually hides a dangerous logical flaw — it equates “holding duration” with the “core of long-termism,” but time itself cannot create value; only giving good companies time can generate value. Holding a poor company’s stock for ten years might turn a 20% loss into an 80% loss.

First, long-termism is a multiple-choice question.

True long-termism does not start with how long you plan to hold, but with what you buy. Buffett’s views are often quoted and taken out of context; people remember him saying, “My favorite holding period is forever,” but they overlook the premise he stated before: “Only buy companies with sufficiently deep moats that can continue generating cash flow over the next ten years.”

In other words, the threshold for long-termism is a judgment of a company’s essence. Whether a company is worth holding long-term depends on at least three questions: Does its business model have sustainable pricing power? Will the industry continue to expand over the next decade? Is the management team creating value for shareholders?

Many believe they are practicing long-termism, but in fact, they are trapped in the sunk cost fallacy. True long-term investors approach their holdings more like ongoing evaluations rather than passive waiting. They periodically ask themselves: Does the original logic for buying still hold today? If the company’s fundamentals change fundamentally, they will exit without attachment.

Second, industry ceiling is more important than individual stocks.

Choosing well is not just about selecting the right company but also about choosing the right sector. Some investors look for the best company within a sunset industry and hold it long-term, but the industry’s cake is shrinking, and even the best companies are competing against industry shifts. Choosing the right sector requires a basic judgment of industry trends: which demands are growing, which are being replaced, which barriers are real, and which moats are drying up.

The most common mistake is to treat “rapid growth in the past” as evidence that “growth will continue in the future.” The market does not reward you just because you hold for a long time; it rewards those who select companies with “genuine growth.”

Finally, long-termism is a matter of cognitive density.

Short-term traders may make frequent decisions, but each decision has low cognitive content — essentially betting on short-term emotions and capital flows. Long-term investors compress a lot of time and effort into a few key judgments: Is this company worth trusting? Where is this industry headed? Has the current price already reflected reasonable expectations? Each judgment must be more cautious and rigorous because the cost of mistakes is high.

This is also why truly long-term investors often seem to do little work — but that’s an illusion. Genuine value investing requires focusing on “selecting” rather than “trading.”

The market is not short on patience; what’s lacking is justified patience. Holding for a long time is merely an external expression of long-termism; choosing well is its soul. Confusing the two often results in, after a long wait, not compound interest but an expensive lesson in self-deception.

Author: Li Yijian

Source: “Financial Expo · Wealth,” 2026, Issue 3

Editor: Xue Xiaoyu

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