Hey guys, it's sasha one of the most common mistakes in investing is that people don't properly understand how long they should be investing their money for or when they should be putting their money in, and i don't mean this in the basic sense. This is not a video telling you that, as a long-term investor, you need to go and put your money away for at least 20 years investing time. Horizons are an incredibly important part of making investing decisions and most people either completely ignore this part or don't really think about it, i'm guilty of sometimes not giving this enough attention. So in this video i will explain some really important points about how you can and how you should maybe think about investing time frames.

Perhaps it is not as simple as some people think it is also very important and it is very often overlooked. Okay, so you are an investor and you have decided to invest your money into a particular stock. You have done your homework and you've decided that you particularly like this very company, and you think it is a great investment with a massive potential upside. So you are ready to put your money in, but here is a a very, very important question for you.

How hard do you think your money is going to work for you over the time that you plan to hold this investment? Will it work as hard for you the moment you put your money in right now, as it will in three years time? Will your money be working harder in five years than it will right now, when you put your money in, should you even be investing in that stock right now, or does your time horizon analysis say that maybe you should be putting that cash somewhere else, because here Is an important thing. We all know the time in the market beats timing the market, but we also all know that if we try to time it more often than not we're gon na get it wrong right. Well, not quiet! It is more nuanced than this, because when you make an investing decision, you are not just making a decision on whether to go and invest in that one company or not. It is not a binary kind of thing if there was only one company in the world that you could invest or not, invest into then sure yeah.

This video would be completely irrelevant. You might as well just go and shove all your money in. If you think it's an upside, but there is always a bigger choice. There are other companies that you might also think have a big potential for their share price to grow, maybe a similar sort of potential.

So when making an investing decision, you should of course be thinking about time horizons, because those might impact the choice that you make. Imagine you have a company x that you think has a hundred percent upside and then let's say the outsider does turn up over a five-year period. But not all companies like company x are created equal. The market does move in mysterious ways, so you might say that you expect the average path for your money to be paid off to be a.

You know, a straight line on average you'll sort of find this upside. You don't know when it might go up or maybe down along the way, do lots of wobbling, but that's sort of average is what you're aiming for, but some companies will naturally tend to collect their upside sooner. The graph might look something like this. Some other companies might collect that upside later on, so you might have to wait a few years before anything really happens.

So here's the thing you can time the market like a boss, because you can assess the range of probabilities. Sure it's not going to be completely accurate all the time, but you can build an expected set of potential outcomes that will drive the shape of that growth curve in the future. There are three main reasons that affect this curve and i use them. In my analysis.

All the time, so let me go through them and they are cash flow timing, catalyst and investor sentiment. I'll, give you some examples as well in real life, so that it is a bit easier to understand. First up, let's talk about cash flow timing. This one might be the most boring and maybe also the least obvious of the three, but it's also sometimes the most important.

The company's share price is meant to represent the sum of all the future expected cash flows from that business. So if a company for example, goes and makes one dollar per share and free cash flow next year, that means there is now one dollar more per share sitting in a company bank. Can you own one dollar more in hard assets with that share that you have, and whichever way you use to assess the target share price, whether you're doing multiples building models whatever whatever approximation, it is you're doing you're, basically just ultimately trying to figure out what the Sum of those future cash flows is going to be, but the way these look for different companies will look very different. Take apple, for example, apple is printing cash.

At the moment they are expecting to smash all records with iphone sales in the next month and as a shareholder. Your share price reflects that the company is going to be collecting a whole load of money over that coming month over the coming quarter in q1, when they usually dwell next year and so on and so on. So when you make an investing decision, you might expect a relatively steady flow of return on your investment and a steady flow of cash against your projected target price will probably get the market to agree with your target share price gradually too. So you might see something like a steady straight line by the way this platform i'm using right here, is called steak, and if you live in the uk, australia in new zealand, you can go and try it out and get a free share with 250 dollars.

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Okay, so you might have something like a straight line: expectation for apple, but then go and take a company like palantir or maybe fiverr, both that i am invested in. They are currently losing money in their p. L quite heavily whatever free cash flow that they do get goes and gets spent on things like r d and marketing and quarter after quarter after quarter. These companies are posting big losses.

Investors are expecting that these companies will eventually start making profits at some point. In the future, but between now and that point in the future, those investors are expecting to lose more money, so the graph here might be quite back weighted as a result. So if you're looking at just cash flow, you might say okay, i will wait before i invest in a company like fiverr or parent here until are about to turn profitable. Then i will invest and collect all those future cash flows.

From that point onwards, the one issue with that is that the current share price in a theory already bakes in those losses into the share price losses that the company is expecting to make in the next few years. So the closer you get to the point of profitability, the less of those future losses are left to collect, and that should mean that the share price goes up, even though the company is continuing to lose money in practice, though, it often doesn't really follow that logical Route and the share price does often wait for profitability before making its big move. We saw it with tesla recently, where the company only began technically being profitable in q3 2019, and you can see that the investors were pretty happy on the back of that. So you might have a very accurate thesis that tesla would begin making a lot of money a few years before that.

But even though you were absolutely bang on the share price was exactly the same in 2014 and traded sideways for five years. While tesla was going through the early stages of growth, funding, difficulties and all of that, and many investors, including large funds, make their investing decisions in relatively rudimentary ways, not always because they're not smart, sometimes because they have rules restrictions targets, they have particular objectives whatever and How they can you know, invest or what they can invest in. So the timing of future cash flows is definitely an important factor, but it is not the only factor, and this is where people often make the mistake of saying i'll. Wait for palantir to become profitable or fiverr to become profitable or whatever, because the second very important factor is catalysts.

Catalysts are not usually something long-term investors talk about much. It is more of a swing trading kind of type of topic. You notice that a lot of indicators are likely to move a price up or down as a trader, and you get very excited, but catalysts are an important investing factor because they can accelerate or slow down that expected rate of return curve. I recently made a video about tesla having a number of very large positive catalysts over the next eight weeks, and i don't talk about this very often.

But there are a number of really big catalysts happening that i think are particularly unusually concentrated in time. They're all happening in a relatively short window and tesla's share prices. I'm recording this video is somewhere around the 1170 range, but my target price on the stock is 3 000. So i personally see a big upside and i don't know how long it will take for that upside to come through.

But what i do know is that these catalysts could well make the curve accelerate, faster and typically with this sort of type of thing, once the catalyst come in and accelerate the rate of growth, even if there is a drop after the catalyst happen, you don't drop Anywhere near where you started big positive news that make a material difference to how investors see the future performance of a company can really fast-track the growth in share price, even if the news is anticipated. Even if we all know that it is coming. The anticipation often only brings a fraction of the value. The actual news then goes and turns up when that news happens and with tesla we have two of the biggest factories ever built that are about to do due to star production in the next few weeks.

We have record-breaking acceleration and production rates, even without those factories coming in the next quarter or two and a bunch of other stuff feel free to check out this video up here and i'm gon na put it in the description as well for all the details, but Carrying on with this, i feel that this may mean that i can collect a decent chunk at least of my potential upside on tesla sooner than i would otherwise be able to do because of these catalysts, and that is why tesla is the biggest position in my Portfolio at the moment, despite it not having the biggest potential upside percentage, i made a video about lucid motors a couple months ago, where i talked about a huge catalyst. It was literally just based on one picture. I saw on social media, but it was a really important picture. It showed that lucid started production and deliveries of customer cars.

That picture showed the first batch of cars on transporter being delivered, and i said how i expected a stock like that at that point in their journey is possibly going to get a very big boost as a result and sure enough. Within a few days, lucid announced publicly that they have started production and delivery of cars, and there was a huge amount of media attention. It was just all over the internet and the share price went up over 100. Now i didn't expect it to go over 100 percent, but it did, and that was purely because of the catalyst and there's also a third factor that you absolutely have to consider, and this one is a bit more subtle than the first two.

It is the investor sentiment and investor sentiment is the sort of some of all the non-numeric elements of a stock sort of total sum of the qualitative assessments with the sprinkling of feelings and a bit of a dusting of opinion. By the way, if you are interested, the best way to gauge investor sentiment, in my opinion, is through tip ranks that i personally use. You get a ridiculous amount of information on here. Almost 16 000 wall street analysts share their target prices, share their thoughts and opinions.

Articles etc and there's even a news sentiment section here that shows you how many positive mutual negative news articles, for example, are being published, feel free to sign up to tip ranks using my link in the description if you're interested. If you want to get access to that data and i'll get a commission as well, so thank you. If you choose to do that now, the sentiment is partly based on data. Sure data is very important, but there is way more to it.

People love to hate things in the world of investing people, love to hate companies and a negative sentiment can be a major suppressor of the share price. The opposite is also true. By the way some companies build up a crazy amount of love. That sometimes, is not really necessarily based on fundamental reasons, and that can cause stocks to be very, very overvalued.

I personally think that, at the moment, that sort of factor is happening within video, for example, and the extreme end of this is when we get to a hype stage, when stocks can go up way way over what anyone would realistically consider a fair share price. Just based on the hype and sentiment is very difficult to time, but one of the best ways to think about it is to think about the macro level think about longer time, scales. Think about kind of the overall picture. Look at tesla.

This is one of the best examples of a stock that attracts a massive huge fan club people who absolutely love the company, love elon, musk love the stock, but they also attract an even greater number of haters a few years ago. The sentiment was really really negative for tesla and at the macro level, in terms of news media government policy and all of that the sentiment was very much against tesla. Even just five years ago, the world, relatively speaking, didn't really care about the environment. Climate change was important sure, but relatively low on the overall agenda.

It certainly wasn't in the news or publicly talked about anywhere near like it is today. Everyone still bought gas guzzling cars and nobody really cared. Nobody really even thought about whether we should be buying something else, but look at all of that now the mood is shifting very fast. Media is becoming more and more obsessed with electric vehicles, sure we still have a lot of publications financed by traditional manufacturers and sometimes in some spaces.

But the shift is happening. Self-Driving is becoming a much more popular topic and i think it's going to become much more popular still. Governments are battling to outdo each other with green promises. Saying they're gon na do this by 2030 there's something else by 2035 and the sentiment around tesla as an investment is shifting as a result as well.

This one is impossible to measure very difficult to even gauge or understand, but it is very clear to see when you take a step back and apply a long enough time scale and that change in sentiment can be a massive, a very huge driver of share price. One of my biggest positions at the moment, for example, is fiverr and sentiment at the moment. Fiverr is kind of not there. Nobody really is paying attention.

Nobody cares, but sentiment is the big reason why i am in that position. I do not see fiverr having cash flows that turn any kind of positive income for several years. My model has them losing money for quite a while, and fiverr is also a small stock with no particularly noticeable catalyst in the grand scheme of things that will, you know, cause anyone to pay attention, but the way in which companies operate the way in which they Make decisions to hire or outsource that work instead, the way that people are shifting to working for themselves or in small companies and the way that work is becoming more distributed is something i think will shift the sentiment on that entire world of work in a massive Way in the next five years, i think we're only just getting started with replacing huge behemoth corporations with hundreds of thousands of employees with a more distributed way of working and we'll have to wait and see how that one plays out see if i'm anywhere near right. But that's that that's my view and that's why i'm in that position, if you found this video useful, please don't forget to smash the like button for the youtube algorithm.

Thank you so much for watching. I really really appreciate it and, as always i'll see you guys later, you.