Stop. Just stop. Turn off the alarm and put down the business book. There’s an easier way to build wealth (and we promise no multi-level marketing schemes… which is exactly what a scheme would say…anyway…)
There is a story that has become folklore in the market (although almost certainly isn’t true), that Fidelity studied its best performing trading accounts and found they all belonged to dead people. Zombie traders? Not quite… It appears that the best traders are those that don’t trade at all. Just buy & hold. Don’t sell because a competitor emerges. Don’t sell on bad news. Don’t try and time the market. Buy. And. Hold.
Now while the story isn’t true the principles underlying it are solid. People are too quick to sell good companies at the first sign of bad news. Sometimes the best decision is to do nothing. Sometimes the most growth comes to those who are patient rather than active.
Don’t get us wrong, this is hard. Even the best stocks have some really dark days. When the stock price starts to fall it is only natural to think about selling. When other stocks (or cryptocurrency) is shooting up, it is hard to hold your slow growing stock. You get the investing version of FOMO and want to jump ship.
To help you get through the tough times, we’ve pulled out 3 of the best performing stocks from the past decade and highlighted their worst moments. These moments where it seems the business was set for a downturn, where investors sold out. For each of these instances, the businesses bounced back and rewarded the investors that stuck with them. Hopefully this’ll help you hang tough next time you’re thinking of selling a good company.
Australia – Northern Star Resources (ASX: NST)
United States – Domino’s Pizza (NYSE: DPZ)
England – Games Workshop (LSE: GAW)
So you don’t need to time the market perfectly. You don’t need to sit in front of a screen, trading in and out of stocks. You simply need to buy good businesses that earn a profit and can use that profit to grow their business. Everything else is just noise.
To take part in this wealth-creating engine, the one thing you need to do is just get started. Saving and investing early is the most important factor in setting yourself up for financial freedom.
To help you get started we’ve put together the twelve-part podcast series Get Started Investing. Start listening to the series below, or subscribe in your preferred podcast host so you never miss an episode.