Dear stock sailor,
You make money with stocks while you hold them. This is a credo that many successful investors take into account. Warren Buffett and Charlie Munger have both made statements along these lines.
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But what does that actually mean? Basically, the buying and selling process is just the entry and exit of a company, while holding a company means profiting from the company’s profits and from the increase in value.
On the other hand, if you buy and sell too much, you not only pay a lot of fees. The increased trading volume also usually leads to poorer results. The compound interest effect cannot develop freely. Too many companies in a portfolio also means that you are not always invested in the best companies.
But what if you’re not making money from stocks? Especially not while you’re holding them? It’s definitely an indicator that you should re-evaluate your approach.
Earn money with stocks: Holding remains the value driver!
The first key insight is that most investors still make money from stocks while they hold onto their securities. But there may still be certain aspects that are holding you back or preventing you from making a greater return.
For me, the first alternative is: your holding period is not long enough. Holding is defined over many years or decades, not over individual months or a few years. This also means that as an investor you have to be prepared to accept such a holding period. Short-term volatility can lead to many different opportunities (also in the short term). But as Warren Buffett once said: the market is a beauty contest in the short term. In the long term it is a scale and therefore the catalyst for wealth.
Anyone who has not yet made money with shares should therefore ask themselves whether we are talking about a representative period of time. Or, to put it more specifically: Don’t expect too much too quickly. Give your companies the time they need to really develop their potential.
But maybe there is a problem with the selection…
If time is not the problem, then perhaps the selection of stocks is. In this case, I would ask myself very critically: Am I really investing in the best companies? Or have I perhaps invested in cheaply valued stocks of companies that are having problems? In any case, it is generally really good companies that make the difference in the long term. Mediocrity or problem cases, on the other hand, have little return potential. Sometimes it is also individual stocks that hinder your portfolio.
If that’s the case, rethink your approach. Find out what really sets good companies apart. Is it the management, an innovative product, a vision, growth, competitive advantages or special qualities? Anyone who reorients their approach in this direction should make money with stocks in the long term.
But remember: This happens when you hold. Not when you buy, not when you sell.
To your success!
Vincent clock
Stockworld360
High inflation, looming recession, shaky banks: the list of threats to the stock market is long. In uncertain times like these, it is especially important to hold shares in financially healthy companies.
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