Pabrai's 2 year holding rule ... helpful or fatal?
Mohnish Pabrai stated that one of his rules is to never take a loss if the position is held within two years. Most behavioral investing finance books say that never taking a loss is the path to investing destruction. Could this be fatal? Or could this be helpful?
If a person has a longer-term holding period, it makes sense to ignore the stock price movement for the next couple of years because value investing ideas, being contrarian that they are, share near-term outlook that that sucks anyway. In this case, this rule is helpful.
On the other hand, if a person is too stubborn to admit a mistake within a two year period, this could be a fatal flaw.
What do you think?
posted by Mike Onghai, CFA @ 5:48 PM
1 comments
1 Comments:
I can't tell you if the rule is appropriate once the investment is made, but I do like the idea as a investment idea filter. If you are not willing to own it for two years, don't invest.
Post a Comment
<< Home