As my last tip for this millennium I wanted to relate a conversation I had with a gentleman a few years back. We were discussing the general investing process. We both agreed about how stock market investing is a long term process and how silly it was to expect short term results from long term investments.
But as I spoke to him, I found out that he subscribed to a telephone switch newsletter and that he was moving in and out of different stocks several times a year. That was when I realized that stock market investing requires not one kind of patience, but two. The first kind is patience with the stock market as a general investment vehicle. But the second kind is patience with the individual issues. This gentleman could be patient with the market but had no patience for individual stocks.
That kind of patience is sometimes very difficult. Sometimes it’s very hard to just sit and wait. History has shown that it’s over the long run that stocks are the best investment vehicle. But add frequent fees and increased income taxes and stocks are not nearly so attractive. It’s only over periods of three years or more that stocks can really shine.
I think that the the turn of the millennium can serve as a reminder to us that sometimes we focus too much on the short term. But it’s by being patient with the forces of the market, economics and history that we will find the most benefit in our investing, and in our lives.