Tencent, Alibaba and Baidu will reward patient investors who stay with them through the headwinds

Oliver Cox says China’s tech sector has taken a beating of late and some of its giants are in a transition process, but a look at the quality of the work these companies do should encourage investors to stick around

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Robin Li, CEO of Baidu, arrives for the Baidu Create 2018 event in Beijing on July 4. Baidu’s progress in AI and voice-activated searching gives investors reason to be bullish on its stocks despite recent setbacks for China’s tech sector as a whole. Photo: AP

Published: 10:15am, 5 Oct 2018Updated: 10:30pm, 5 Oct 2018

We know from the writings of Warren Buffett, backed up by multiple academic sources, that wealth is generated from waiting. Buy companies that you believe in and stick with them through thick and thin, back the best management teams and resist the temptation to react to short-term news flows.

Put another way, simply try to do nothing to see consistent compound interest gains on a gradually growing equity base accrue over a long period.

The problem facing investors, bombarded by a huge amount of information every day, is that “doing nothing” is actually quite hard.

The Chinese technology sector, comprised of both internet and gaming companies as well as hardware and component manufacturers, serves as a classic example of a sector whose shiny long-term prospects are in conflict with some admittedly challenging short-term headwinds.

Investors could be understandably tempted to abandon the sector, but a thoughtful long-term holding strategy of simply sitting still may be more prudent.

Billionaire investor Warren Buffett once told Forbes, “People have been successful investors because they've stuck with successful companies. Sooner or later the market mirrors the business.” Photo: Xinhua

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