Long

To “go long” or take a “long position” is the most fundamental act in investing: buying an asset with the expectation that its value will increase over time. When you hear about someone buying shares in a company like Apple or a few bars of gold, they are going long. They own the asset outright and are betting on its future success, growth, or increase in demand to drive the price higher. This is the bedrock of investing for most people, from a teenager opening their first brokerage account to legendary figures like Warren Buffett. A long position is an optimistic, or Bullish, stance on the future of an asset. For the Value Investor, going long isn't just a trade; it's the act of purchasing a piece of a business, intending to hold it as a part-owner while the company grows and creates value. The ultimate goal is simple and timeless: buy low, sell high.

At its core, going long is the most intuitive investment strategy. You believe something will be worth more in the future than it is today, so you buy it. It’s the same logic you apply when buying a house in a promising neighborhood or a piece of art from an up-and-coming artist. You are investing in potential. This strategy is foundational because, over the long term, economies and well-run companies tend to grow. Corporate profits increase, innovations create new markets, and inflation generally pushes asset prices up. By going long on a diversified portfolio of great companies, you are essentially placing a bet on human ingenuity and economic progress—a bet that has historically paid off handsomely. It's a strategy of participation and ownership, not just speculation.

To fully grasp what it means to be long, it helps to understand its opposite: going short. They represent the two fundamental bets you can make in the market: that a price will rise (long) or that it will fall (short).

The long position is the straightforward path of an owner.

• The Goal: To profit from an increase in the asset's price.
• The Mechanics: You buy an asset and hold it. Your ownership is direct.
• The Risk Profile: Your maximum loss is limited to the amount you invested. If you buy a share for $100, the absolute worst-case scenario is the company goes bankrupt and the share becomes worthless, losing you $100. This is a form of Limited Liability. Your potential profit, however, is theoretically unlimited, as there is no ceiling on how high a stock price can climb.

The short position is a more complex strategy employed by skeptics and speculators.

• The Goal: To profit from a decrease in the asset's price.
• The Mechanics: This involves Short Selling, where you borrow an asset (e.g., a share) you don't own, sell it on the open market, and hope to buy it back later at a lower price to return to the lender.
• The Risk Profile: The risk-reward is flipped. Your maximum profit is capped at the price you sold the asset for (as the price can only fall to zero). Your potential loss, however, is theoretically unlimited. If you short a share at $100, and it soars to $500 or $1,000, you are on the hook to buy it back at that much higher price.

For a value investor, “going long” is far more profound than a simple bet on price. It is the culmination of disciplined research and a commitment to business ownership. As the great mentor Benjamin Graham taught, the goal is not to trade flickering stock quotes but to buy into a durable business. A value investor decides to go long only after a rigorous process of Fundamental Analysis. This means studying the company's financial health, the quality of its management, its position within its industry, and, most importantly, its long-term competitive advantages, or Economic Moat. The final step before taking a long position is to calculate the company's Intrinsic Value—what the business is truly worth. A value investor only buys when the market price is significantly below that calculated value. This crucial discount is known as the Margin of Safety, which serves as a buffer against unforeseen problems or errors in judgment. Therefore, for us, going long is a deliberate, well-researched decision to become a long-term partner in a wonderful business that we were able to purchase at a sensible price.