{"id":9317,"date":"2015-01-27T08:48:56","date_gmt":"2015-01-27T16:48:56","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=9317"},"modified":"2016-12-21T07:27:48","modified_gmt":"2016-12-21T15:27:48","slug":"your-investing-secret-weapon-is-time","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/your-investing-secret-weapon-is-time\/","title":{"rendered":"Your Investing Secret Weapon Is Time"},"content":{"rendered":"

It seems\u00a0like 99% of the financial pages on the Internet are\u00a0devoted to a single idea \u2014 that you can beat the market just by owning the right stocks at the right times<\/a>.<\/p>\n

That’s great marketing, I suppose. It’s action-oriented (do something!), specific (buy this stock now!) and utterly unfalsifiable. Nobody knows if a given stock will go up or down, so it can’t be proven that it won’t go up.<\/p>\n

But flip that logic for a second. It also can’t be proven that the stock won’t go down instead. Investing history is littered with companies that lost market value and never, ever recovered. They just went out of business. It happens to a lot of “hot” investments.<\/p>\n

\"investing<\/p>\n

A much larger number of companies have a moment in the sun and, years later, find their fortunes revived by chance, good management or both. The problem is, you spent a long, long time in that investment earning nothing<\/a> \u2014 no dividends, no price appreciation.<\/p>\n

Would you, could you hold on to a single stock in a large enough concentration to matter to your portfolio through a decade of poor returns? Probably not. In fact, the much more likely outcome is that you will wait until the stock\u00a0hits its\u00a0lowest point and then sell, locking in the loss forever.<\/p>\n

Or the reverse, you buy a stock as it hits its all-time high point. From there, it’s often all\u00a0downhill for a long, long time.<\/p>\n

It’s for this reason that individual investors do so poorly, earning 2.5% compared to more than 9.2% for the S&P 500 over the\u00a020-year period ending in 2013. Our brain tells us to buy what has gone up and sell what has gone down<\/a>.<\/p>\n

In fact, it’s the other way around. We should be selling the gainers in order to buy more of the relative “losers.” That’s portfolio management by rebalancing, a standard practice among the world’s top endowments and pension funds.<\/p>\n

Investing secret weapon<\/h2>\n

As for the time aspect, that’s the key. Don’t wait for the “right moment” to buy. Instead, own the market all the time through a\u00a0well-designed portfolio that includes stocks, bonds, real estate and foreign assets<\/a>.<\/p>\n

Rebalancing with discipline over long periods will bring you a stock-like return without the stock-like risk involved in owning just the S&P 500. You are more likely to stay in during down markets and more able to capture the upsides of strong recoveries.<\/p>\n

More importantly, you will in time begin to accept the truth about all those Internet headlines telling to take action now \u2014 it’s a mistake. Rather, you are taking action\u00a0prudently by staying invested in a risk-adjusted way<\/a>. It’s your investing secret weapon: patience and avoiding emotional mistakes.<\/p>\n","protected":false},"excerpt":{"rendered":"

It seems\u00a0like 99% of the financial pages on the Internet are\u00a0devoted to a single idea \u2014 that you can beat the market just by owning the right stocks at the … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":9320,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[3],"tags":[],"yoast_head":"\nYour Investing Secret Weapon Is Time | MarketRiders<\/title>\n<meta name=\"description\" content=\"Your investing secret weapon: patience and avoiding emotional mistakes.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.marketriders.com\/investing\/your-investing-secret-weapon-is-time\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Your Investing Secret Weapon Is Time | MarketRiders\" 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