Hey guys, it's sasha huddle has become the definitive investing strategy over the last few years. It doesn't matter what you're investing in crypto stock market, something else. People will tell you that the only way to do well is to huddle, if you believe in the company, if you believe in the stock, you will huddle for anyone who hasn't heard the term before huddle is a sort of intentional misspelling of the word hold, and It stands for hold on for dear life, and the strategy is pretty self-explanatory once you know that acronym it says that you go and buy into any particular investment, and then your only strategy is to hold on to it. No matter what you ride all the ways you write the big ups, you write the big downs because you are a long-term investor and you don't care about the short-term fluctuations.

You are not here to make a quick buck. You are in it for the long haul. So you put your money in and then nothing absolutely nothing can force you to sell. You won't ever sell the stock.

No matter what happens, you must have heard. People say that kind of thing before and the problem is that this is a very, very bad strategy for investing in this video. I'm going to explain to you why that is i'm going to show you how huddle can cost you a lot of money and it's not because the stock you're holding might crash. It is a lot more subtle than that.

So so hear me out. Okay! So yesterday i made a video talking about nvidia. This is a company that was one of my biggest stocks in my portfolio. I love the company.

I believe that they're going to be doing really really well. I am a big fan of the business, but yesterday i sold all of my nvidia stock. I now own precisely zero nvidia shares and some of the people commenting said that this is a big mistake. If you believe in the company, why would you ever sell the stock, so i thought well, let me make a video, so i can explain it in a lot of detail.

The concept of investing is incredibly simple. If you take a big step back your objective as an investor, is to buy low and sell high right, we all know that that is really super basic as a long-term investor. Your objective is to try to find companies where the current value of their shares is too low much lower than what you think is a fair is a good price for those shares. That's when you will want to go and buy those shares by the way.

If you don't do this, if you don't buy based on trying to identify what the share price should be, if you don't make any kind of assessment of what the company's valuation should be in your opinion, then you may well be investing just based on hype. It is a really bad idea to do this. You don't want to invest in hype. You don't want to invest based on what some random guy on youtube is saying.

Make sure that you understand how to do your own research and i'm gon na be talking about that kind of stuff, a lot more on my channel, so if you haven't done so already feel free to subscribe now, let's take a popular company. Let's say: tesla tesla's share price at the moment, as i'm recording this video trades at about 678 dollars and for me that is still a very good price. The price that i think shares should be worth is much higher and that's just my personal opinion, but a lot of people who invest in tesla will do so, regardless of what the share price, their argument is. Usually something like well, i believe in elon or tesla will be the biggest company in the world.

You just don't understand, or something else like that, and all of these are really interesting points and they're worth talking about. But when i ask those people what their target price is, i often get an answer which which sort of sums up as it doesn't matter, because the objective is to buy and then to huddle. The stunks will only go up right well, so i then go and ask those people, and i say: would you buy the tesla stock if it was two thousand dollars and the answer is almost always, of course, i believe in tesla, if it was two thousand, i'm Gon na buy because then it's gon na go to three thousand or whatever i'm gon na make a lot of money. But what if the share price was twenty thousand dollars? What if it was two million dollars, would you still buy the exact same tesla shares right now if they were worth two million dollars? If that's the price per share, i'm guessing that at this point the answer might be.

No. That would make tesla's valuation tesla's market cap 1.9 quadrillion dollars or about 50 times the sum of the entire world's stock market. So after a bit of prodding, most people probably would agree that there is a line out there beyond which they wouldn't buy the shares they just don't want to think about where that line is or how they decide where that line is because, when you buy shares, You're buying two things you are buying the future cash flow, the company. You are trying to assess what the future cash flow will look like and what the appropriate price for those cash flows today is.

You may receive those cash flows as dividends, or you may benefit from the company's balance sheet growing through this cash flows flowing into the business and that increasing share value in turn, but you're also buying not just the cash flow but you're also buying the future value Of that business's cash flows at a future point in time, because in five years time somebody else out there will be doing the exact same assessment based on their view of future cash flows. At that point, so let's say you go and buy a company share. The share price is, let's say: 83 when you buy a new thing, that a fair price for the future cash flow. That business is 150.

If you believe that your 150 share price is accurate, then you are essentially thinking that you're buying one dollar for 55 cents, and you are hoping that as time wears on as more evidence turns up to show that your valuation was right and the markets was too Low then you know the quarterly results will turn up annual results. All of this stuff will eventually materialize and eventually more people will realize, as all this information turns up, that the share price should definitely be higher and it will become more obvious quarter after quarter and eventually that one dollar may well be worth a dollar. But here is the really important lesson that you need to understand. Knowing when to sell, your stocks is one of the most important things in investing, and it is often far harder to know that than to know when to buy.

If you blindly apply a huddle, your long-term investment performance will suffer, don't get me wrong in the short term hodling or holding or whatever you want to call it through. The swings is critical. It is super important not to be reactionary. It is incredibly important not to panic, but let's say you did, go and buy that stock at 83 and then the share price of that company that you think is worth 150 becomes 160.

You then go and redo the mass, and it still says that you think a fair price for that share. Right now is 150. What should you do? There is a school of thought out there that will tell you that you should huddle in the long run. The share price will go up and you might miss on that growth, but i personally prefer to make my decisions based on numbers.

I prefer to use maths. I prefer not to go based on emotion or my personal feelings about the company or how much i believe in the business, because if the current share price is higher than my target price, then my mathematical expectation is that i'm buying one dollar for one dollar and Seven cents right now either my valuation is incorrect and i need to address that or the share price has gone too high. My expectation is that the investment i am making will, on average, stay flat or even maybe lose a little bit on value, and if that is my expectation, why do i want to hold on to that investment in the long run? No shares may well go up and in many cases they will, but as a value investor, i want my money to be working for me on average, when you set a target price, you are saying that on average, the outcome that you expect to happen is x, But if there is a big window around that average, that means that sometimes things will do much better than that average performance and sometimes they'll do much worse. So why do i want to have my money sitting in investment, where my average expectation is that my money is going to stay flat and do absolutely nothing and there's a 50 chance that maybe i'll make a little bit but there's a 50 chance? I will actually even lose money.

Huddle in this case just becomes stagnation. It becomes a reason to do nothing. I want to take my money out of assets where i don't feel there is an upside and then what i want to do is i want to go and take that money and put them into the next thing, where i again think that i'm buying one dollar For 55 cents, and when that 55 cents itself goes and grows to become a dollar, i want to get rid of that asset as well and do the same thing all over again. It's no use writing to the peak.

Only to then write all the way back down if you knew at the peak that your investment is overvalued, sure if you didn't or if there was a market crash or whatever that's fine that happens in investing all the time, and sometimes you will exit a position That you think is overvalued and that position will then go and grow. Another 30 percent. That will also happen, and that will happen quite a few times - that's normal. But if, on average, you do your homework properly and your valuations are right, more often than they are not, then choosing not to huddle can be the massive difference between doing really well with your investments and just being average.

I hope you found this useful if you have, please don't forget to smash the like button future algorithm so that more people can watch this video. Thank you so much for watching. I really appreciate it. As always i'll see you guys later, you.