Summary of Key Points
This article highlights a crucial principle through three classic cases: Country Garden’s sale of Changxin Technology, Li Zekai’s sale of Tencent shares, and SoftBank’s sale of Nvidia. The lesson is that long-termism is not just about shouting slogans; it requires substantial financial strength—low debt levels and sufficient cash flow—to support such strategies. When faced with short-term financial pressures, companies or individuals often have no choice but to sell their most valuable assets (which are the easiest to liquidate), thereby missing out on potential future gains. The article also warns that many mistakenly equate being “trapped” in investments with practicing long-termism, when in reality, true long-termism is an active choice made based on financial security.
The Three Cases of “Premature Sales”
1. Country Garden: Selling Changxin Technology to Meet Housing Delivery Obligations
In 2021, Country Garden’s investment arm invested 900 million yuan in Changxin Technology (which was still losing 30 billion yuan but had promising technology). It held a 1.56% stake in the company. When the real estate crisis hit in 2023, Country Garden needed to sell its shares to meet housing delivery commitments and save itself. By the end of 2024, it sold all its shares for 2 billion yuan, a doubling of its initial investment. However, by July 2025, Changxin’s market value had risen to 3.6 trillion yuan, meaning Country Garden’s 1.56% stake was now worth 56 billion yuan—a near 50-billion-yuan loss.
2. Li Zekai: Selling Tencent Shares to Pay for a Merger Loan
In 2000, Li Zekai invested $1.1 million to acquire a 20% stake in Tencent. He later used $359 million to buy Hong Kong Telecom, with the cash coming from a $120 million loan. When the NASDAQ bubble burst, Telecom’s stock price plummeted by 90%, putting significant pressure on his loan repayments. He sold his Tencent shares for $12.6 million, earning a tenfold return in just over a year. Today, Tencent’s market value exceeds 5 trillion Hong Kong dollars, and his 20% stake is worth nearly 1 trillion Hong Kong dollars—a difference of almost 80,000 times.
3. SoftBank: Selling Nvidia to Pay Fund Interest
In 2017, SoftBank Vision Fund invested in Nvidia (holding a 4.9% stake) with the option to receive an annual 7% interest payment. In 2019, SoftBank had to sell its shares to cover the interest costs. Since then, Nvidia’s market value has increased significantly, resulting in a loss of hundreds of millions of dollars for SoftBank. Masayoshi Son later admitted, “The opportunity was huge, but we had no choice but to sell.”
Why Are Good Assets Sold?
The common factor in all three cases is that short-term financial needs outweighed long-term profit expectations:
- Country Garden: The real estate crisis forced it to liquidate its valuable assets quickly.
- Li Zekai: He had to sell his Tencent shares to repay the merger loan.
- SoftBank: It had to sell its Nvidia shares to meet the fund’s interest requirements.
The fundamental conflict is between the “short-term nature” of debt and the “long-term potential” of high-quality assets. Debt demands immediate payment, while valuable assets take time to appreciate in value. The worst times for selling assets (such as during a crisis) are also when their prices are lowest, leading to significant losses.
The Truth About Long-Termism
Long-termism is not about waiting indefinitely; it requires the financial means to do so. For example, Warren Buffett’s long-term strategy works because Berkshire Hathaway has substantial cash reserves (e.g., $150 billion in 2023) and low leverage, allowing him to wait for Apple or Coca-Cola’s values to rise over decades. For ordinary investors, being “trapped” in investments often means they lack the funds to replenish their positions and can only reluctantly continue holding onto them.
Lessons for Ordinary Investors
- Control Debt and Maintain Cash: Avoid excessive borrowing (e.g., keeping no more than 3–6 months’ worth of emergency funds). Otherwise, you may be forced to sell assets in emergencies.
- Distinguish Between Active Long-Term Investing and Passive Trapping: If the fundamentals of an investment are poor, don’t delude yourself into thinking it’s a good long-term investment; cut your losses when necessary. If you own high-quality assets with stable cash flows, hold on if you don’t need the money immediately.
- Match Investments to Your Time Horizons: Invest in assets that align with your financial goals (e.g., buy stocks for a home purchase in 3 years or invest in long-term, high-quality assets for retirement).
In short, ensure your financial security before pursuing long-term goals. Without the right financial foundation, any claims of long-termism are merely empty rhetoric.
Conclusion
Debt can rob you of your future potential by forcing you to spend money now instead of saving it for the future. Manage your debt wisely; good assets can turn current funds into greater wealth in the long run. Whether you’re a company or an individual, focus on reducing debt before seeking long-term gains, otherwise, you might end up selling at the worst possible time.