By Craig Verdi, CFP®
“The Market is the great allocator, from the impatient to the patient” Warren Buffett
The financial media loves to make you think you should invest for the short run. Having faith and patience in the long term growth of quality assets does not sell air time. They have to keep you thinking you constantly need their opinions to be an “informed investor”.
The idea that there is anything that can’t wait when you are truly invested is nonsense. If you own a portfolio of quality assets in the form of stocks why would you care about what happens today?
The media would have you believe it is impossible to take your wife on a vacation or go on a fishing trip for a week without constantly checking on their “information.”
In my opinion, if you commit your hard earned money to being a stockholder of a company, you should know that you have made your decision for the long run. We don’t usually recommend stocks that have no earnings for example. Seems like a good starting point.
Buy top quality companies that have steady growth of earnings and dividends and hold on. Nothing has beaten that strategy over the long run. Yogi Berra said, “The long run ain’t what it used to be” and you may feel that way as you get older. But the log run is actually getting longer. If you are a married couple both age 62 there is a good chance one of you will live for 30 more years. You need growth of dividends and earnings. Cash and bonds will leave you broke from inflation.
You should be prepared to hold the stock “forever.” I sometimes say that my sell date is the date of my funeral. I have no intentions of selling the great companies of the world. It has been a proven road to wealth. No other strategy I can think of has beaten the long term buy and hold strategy of Warren Buffett for instance. You will hear a lot of claims to the contrary. But check out those claims thoroughly and you will see that active trading is hazardous to your wealth. Wealth is built over decades not days. The market is not the lottery.
Know the difference between speculation and investing. Speculation involves luck. Investing involves patience… and time. Decades not days