Utpal Sheth on how buy, hold and sell work for a terminal value investor
Utpal Sheth, Senior Partner & CEO, Rare Enterprises,and Co-Founder & Mentor, Trust Group, says one needs both conviction and courage to be able to buy. After having bought, given that you have a 10-year plus time horizon, you have this long journey of hold. What is it that you need to hold? You need not just patience, but also equanimity to hold. The sell decision is very rare for a terminal value investor but it has to be taken at the right time.
On Terminal Value Investing Utpal Sheth: Terminal value investing is a very powerful concept in my mind. And let me start with a very elementary process. The investment process has three distinct components — buy, hold and sell. This is known to everybody. However, bear in mind that when you buy, you are buying at time T0 at the price prevailing at time T0.
In terminal value investing, you are buying at time T0 at the current market price, keeping in mind the terminal value as you see it at time T10 which is 10 years from now. However, what do you need to buy?
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Some may say you need a tip to buy, but that tip is not a terminal value. So, you need something else. The act of buying means that you have to be a willing and an able buyer, which is alright in the context of consumption, but not in the context of investing. In the context of
