If you think you are a long-term investor, you need to have a time horizon measured in years, not days. Some “investors” think that overnight is long term. If you are reading this blog, that is probably not you. The successful long-term investor believes that, over time, the global economy will continue to grow, providing the basis for long-term growth in equity values.
The long-term investor should also resist the natural, human characteristic of reacting to head fakes. There is a lot going on in the economy and politics today. The media is constantly talking about a wide range of topics that have the potential to bring about market fluctuations and, occasionally, severe market retrenchments.
The future nearly always looks messy and uncertain, yet there is no shortage of would-be pundits who, for a price, will help you to trade into wealth. The path forward has never been clear, particularly in the near term, which makes it difficult to sort out the current market direction. The successful long-term investor ignores the noise and focuses on where the economy and the markets are headed over the next few years.
Once you have decided that long-term investing is right for you, it is important to recognize that creating a portfolio that is consistent with your goals is not a one and done activity. It should prove to be constructive to conduct periodic reviews of your holdings with a view to weeding out specific investments that appear to be no longer consistent with your long-term portfolio strategy. Developing and maintaining a portfolio typically requires access to significant resources. Your advisor(s) may be worth consulting.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA
