Long-Term Investing For The Win

If we were to ask “What do you picture when you think of investing in the stock market,” what would come to mind? One person may picture a stock broker analyzing multiple screens of charts and data or someone shouting out orders on the floor of the New York Stock Exchange as though each second ticking by was another opportunity. Then there are those who may picture the likes of Warren Buffett casually reading the Wall Street Journal, evaluating the news columns for investment opportunities as though he were contemplating where he would like to plant a tree in his Omaha backyard for optimal shade.

Maybe Warren Buffett is well past his yardwork and tree planting days but the method in which he metaphorically contemplates this question helps him identify that comfy backyard spot fit for “optimal shade.”

“Someone's sitting in the shade today because someone planted a tree a long time ago.”

– Warren Buffet

This is a classic Buffett quote delivered in the typically simple Buffet fashion. Please note the quote doesn’t read, “Someone bought an umbrella yesterday, therefore has shade today.” An umbrella may wear out over time, or worse, be battered to pieces in a strong storm. While the tree becomes a fixture of the yard, riding out the seasons and ultimately becoming a much more reliable source for shade over time.

All these metaphors aside, there is a marked distinction between the long-term investing strategies and short-term investing strategies. Long-term investment strategies are built by carefully selecting an investment mix which seeks to provide positive returns over a span of time. Short-term investment strategies revolve around precise timing of market events. Nobody can perfectly predict market events so why create a portfolio that relies solely on predictions?

Since we cannot predict how the market will move or what legislators will do next, we take into account the various risks and economic factors at our disposal to create a portfolio of investments we feel are best positioned for long-term success, all things considered. In a world where the only certainty is uncertainly itself, we aim to focus on those things that matter most and are within our control to better position our clients for long-term success. Managing risks where possible and encouraging a long-term focus serves to reign in the emotions that may come in response to daily market changes.

History shows the stock market has had a long track record of positive performance. Sure, the market has seen its share of ups and downs but since 1930, but the S&P 500 has experienced an inflation-adjusted return of nearly 6% annually since then. To quantify those returns further, $1,000 invested in 1930 would have grown into $214,620 today, even after adjusting for inflation.*

*Past performance is not a guarantee of future results

When utilizing a long-term investment strategy in a portfolio, the most important factor isn’t the timing of the investment or even the investment itself. But it is the discipline which is demonstrated in adhering to the originally defined goals so that one day, like Mr. Buffet, we too can have a shady tree under which to lounge.

The opinions and forecasts expressed are those of the author, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Securities offered through Securities America, Inc., member FINRA/SIPC, Betsy Merritt & Tyler Aubrey Representatives. Advisory services offered through Securities America Advisors, Inc. New Break Financial and Securities America are separate companies. Securities America and its representatives do not provide tax or legal advice. It is important to coordinate with your tax or legal advisor regarding your specific situation. Diversification seeks to reduce the volatility of a portfolio by investing in a variety of asset classes. Neither asset allocation nor diversification guarantee against market loss or greater or more consistent returns.