“In the investing world, the term ‘long term’ is often misunderstood, especially among new investors. Many people begin their investment journey by learning about Warren Buffett, who is renowned as a long-term investor. His famous quote, ‘My holding period is forever,’ is often taken quite seriously by those evolving in the investment space.

However, if we delve beyond Buffett’s words and examine his actual holding periods, we find that his average stock holding period is just 11 months. Throughout his investing career, he has sold most of his stocks within a year. Only a few select stocks have been held for years or even decades. For instance, between 1980 and 2010, approximately 60% of the 230 stocks he owned were sold in less than a year. Some he held for a few years, while others he maintained ownership of for over 15 years but still constituted less than 5% of his portfolio.

“In his 2016 letters to shareholders, Warren Buffett addressed the common misinterpretation of his famous statement, ‘My holding period is forever.’ He clarified that while some stocks in Berkshire Hathaway’s portfolio may indeed be held indefinitely, there is no absolute commitment to hold any marketable securities forever. The intention was long-term ownership, but practical adjustments are made based on changing business conditions or macroeconomic shifts.

This dynamic approach applies to most companies. While some exceptional businesses continue to grow steadily over years, many experience fluctuations. When growth stalls, the appreciation in stock price also plateaus. In such cases, it becomes impractical to hold onto stocks of companies in declining growth trends.

Drawing an analogy, just as different food items have varying shelf lives, companies also exhibit different growth shelf lives. Data suggests that most companies’ growth periods last 2 to 10 quarters. Only a select few manage to sustain growth beyond that timeframe. Investors should be willing to sell when growth stagnates and consider reentering if growth prospects improve.

In summary, being a long-term investor doesn’t mean blindly holding stocks forever. It involves evaluating each investment contextually and adapting as needed.”