Investing for a Lifetime
One of the simple rules of investing is to invest in what you know.
When you know what you are invested in, and perhaps more importantly, why you own it, you can remain a long-term investor.
Being a long-term investor is critical to achieving market (and possibly out-sized market) returns.
This weekend marked the second weekend in a row of making an investment where it matters the most – my kids.
It was father/son weekend at Camp Highland. An insanely active weekend of playing that includes capture the flag, epic ultimate frisbee, and adventure obstacles in and above the tree line.
Few investments of time, energy, and money are as assured as this one. But this one ranks among the list of “no-brainer” investments.
As investors, we want the same assurance when investing our hard-earned capital.
However, investing in the short-term is rarely as clear-cut as the investment made in the relationships with a son or daughter or spouse.
Perhaps the closest similarity to this can be found in knowing what you own and why you own it. Some clear-cut markers can give the investor peace of mind in the midst of uncertainty.
These factors include: a company you know, a Quality company with a profitable track record, fairly priced, has solid revenue growth, is financially healthy, has enduring leadership, and is innovative in its industry.
Practically, knowing what you own can help you stay invested in times of fear and panic and uncertainty like the Panic-demic of 2020. Mr. Market is predictable and insanely irrational all at the same time. But Mr. Market is made up of individual companies seeking to provide valuable products and services to consumers.
These consumers drive the economy through spending, and spending comes from income derived from the production they provide in the economy. It is a continuous circle of value. And some companies put this circle together better than others. We think of them as Quality companies.
Along the way, there are always wild cards in the equation in the short-term that can include, but are not limited to: Fed involvement through monetary and fiscal policy, geo-political events like a Pandemic, trade tensions like we see between the U.S. and China, and of course, election cycles.
Stick with the investments that matter most beginning with the relationships that matter most. Let these investments refresh your soul. In so doing, you will be a better long-term investor of knowing what you own and why you own it.
Your portfolio will thank you for it.