Helios Capital’s Samir Arora breaks the myth: Long term holding not enough to succeed in equities

Samir Arora, Founder and Fund Manager at Helios Capital Management, has challenged a widely held belief in equity investing — that simply holding stocks for the long term guarantees success. In a post on X on Sunday, Arora wrote: “It is easy to disprove the argument that secret of success in equity investing is holding stocks for the long term. Secret is to find stocks that do well in the long term and hold them and that is very difficult to do for only less than 5% of stocks are worth holding for real long term periods and therefore even mgmts and insiders do not know what the future holds for them.”

“Every stock is collectively held by all shareholders for the long term (in fact forever). Whether A holds it for long term or B holds it for long term or shareholders A & B hold it collectively for long term should not matter to the returns given by the stock but we know that a very vast majority disappear even though one or a combination of shareholders (or collectively the market) held them for the long term,” he added. 

Arora concluded that the long-term approach should apply to equities as an asset class, but not necessarily to individual stocks. “Long-term focus should be on investing in equities as an asset — for each individual stock the answer is ‘it depends’.”

In a separate post, Arora offered a personal example to illustrate the risks of blind long-term holding. “I know of many of my friends/relatives who bought physical shares in late 1980s/early 1990s, held them for 35 yrs and today those shares are worth zero or not worth chasing to find out their exact value. That is the big problem of equity.”

Arora’s view is in line with a growing sentiment among financial experts who argue that long-term holding, once considered a cornerstone of equity investing, is no longer a one-size-fits-all strategy. 

In April this year, Akshat Shrivastava, founder of Wisdom Hatch, argued that the “buy and forget” strategy belonged to a different era. “Gone are the days: where you could pick a good business. Invest. And, forget about it. Even trillion-dollar monopolies like Amazon fell by 55% (in 2022!) due to valuation correction,” Shrivastava had said on April 30.

Shrivastava outlined four key strategies followed even by top investors: “Buy a good asset cheap (good entry), ride the momentum, exit when it goes high (good exit), and rotate.” He added, “Stocks these days: have like a 3–5 year cycle max…Real estate is somewhat buy and forget. Stocks are not (at least not anymore). Having 20-year visions on stocks is futile now.”