Why Some Investors Get Left Behind — And How Not To Be One Of Them

Today is going to be different than usual. I won’t be talking about a single company.

Instead, I want to change the way you think about investing. My goal is that by the time you finish reading this, you’ll never buy a stock again unless you first at least consider the prospect of owning it and letting it compound your wealth for years.

I’m not saying this will be what you end up actually doing with every stock you buy. After all, there’s nothing wrong with a short-term trade now and then. And of course, there will be times where you intend to hold for the long haul, but events force your hand.

If a company’s prospects deteriorate materially and your investment thesis is no longer true, then of course you should move on.

But I want you to at least think about the idea of buying a great company and just getting out of the way. And do it before you press the “buy” button.

Sadly, based on experience, I can say confidently that most readers will not follow my advice. But I’m convinced that those who do will be better — and wealthier — investors because of it. Here’s why…

This Is Why Most Investors Get Left Behind

A few years ago, I got an email from one of my premium subscribers. For privacy reasons, I won’t publish this subscriber’s name.

At the time, we were in the middle of a broad market sell-off. But keep in mind that our premium portfolio continued to beat the S&P 500. Here’s what he said:

“The report should give an overview of performance, and suggested stop loss levels on the recommended securities. Frankly, the performance of late does not inspire.”

Before I go any further, let me just say that I don’t blame this reader for demanding excellence. I don’t personally know this subscriber, either. I don’t know which securities he owns in his portfolio, and I don’t know his investing track record. But I’d be willing to bet that more often than not, this investor loses money in the market.

How do I know that? Because he’s focused too heavily on short-term swings.

The instant a stock falls, investors want to know whether they should sell. It doesn’t matter if the underlying company is performing well or not. The fear of losing money is simply too much for most small investors to stomach.

I’m convinced this is why most investors lose money in the market.

The underlying problem is that most of us are prisoners of short-term thinking. For literally thousands of years, humans have been conditioned to think in the short-term. Our focus has been on survival. We needed to ensure we had another meal… a warm place to sleep… and that we were safe…

Even today, long-term thinking doesn’t come naturally. That’s why so many people have trouble saving for retirement… and why politicians always wait until the last possible moment to pass crucial legislation… and why so many investors focus only on the short-term — fretting over day-to-day performance and forgetting that investments are meant to grow their wealth over a long period.

But if we just zoom out a bit, the big picture for the market starts to get a little clearer. Consider the chart below, which shows the incredible growth of the S&P 500 over the past 30 years…


Source: Macrotrends

If you looked back at the past century, then you’d see there hasn’t been a single sell-off that didn’t later turn out to be a terrific opportunity to buy stocks. All you have to do is focus on buying solid companies at attractive prices and have the resolve to hold them for the long term.

This includes The Great Depression… the sell-off in 1937… the sell-off between 1973-74… the 1987 crash… the “Dot-com” crash… the financial crisis… and the Covid-19 pandemic. All of these times turned out to be wonderful opportunities to buy.

Closing Thoughts

I understand why many investors get nervous. But successful investors use these periods to load up on solid stocks that have a proven history of generating enormous large (and growing) profits.

The good news is that even if you don’t have decades to invest, you can still generate significant returns in a few years.

I’ve already explained one part of the process: time. If your goal is to get rich “overnight,” then you should go buy a handful of lottery tickets. By contrast, it takes years to earn truly life-changing wealth in the stock market.

That certainly doesn’t mean you can’t see gains of 20% or 30% in a year. But truly life-altering investments — those that return hundreds or thousands of percent — often take years to reach their full potential.

I’m telling you this now because volatile markets may be something investors will have to deal with for the foreseeable future. There will be times of calm, and I believe over the long term the market will move higher. But the market will occasionally swing, and sometimes wildly.

Although I’d love to see a steadily rising market, these selloffs are opportunities to pick up shares of great stocks at bargain prices. That’s how my we view the market over at Capital Wealth Letter, and you should too.

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