However be flexible......if after 3 years you see it go up 30 times and you see another stock thats likely to double in 2 years time......swutch off to that so that you end up making 60 times in 4 years and not 10 years....hathi baocho bakri kharido style which is perhaps the most flexible style and advocated by manish dave.....do tie up your investment to corporate cash flows....and if you can increase the earnings yield dramatically by switches, dont ever fear.....thats when the compounding comes into play.....
illustration:
1.Stock A=5 times in 2 years.
2.Switch to Stock B=triple in 2 years
3.Switch to stock C= double in 2 years
4.Switch to Stock D=double in 4 years
You end up making 60 times in 10 years, by becoming more and more conservative....
Assumptions:
1.A Full blown out bull market at the beginning of the career for 2 years
2.A Selective bull Market for next 2 year where your performance becomes average(4 years gone)
3.A minor bear market after 4 years upto 5 years and therefater a smart bear market pull back....(6years Gone)
4.A bear market for 2 years after 6 years lasting for 2 years(8 years gone), and then a a leg up rally again for 2 years(10 years Gone)....
However, some more smart and enterprising investors can earn still higher returns by making very aggressive switches like selling outright and reinvesting in the bear market.....for normal investors, this can be applicable...
regards,
Vivek