Markets climb a wall of worry.
– Unknown
There is an old saying, “Markets climb a wall of worry,” which is meant to capture the perverse reality that the stock market often seems to go up when the majority of investors are worried and afraid of global conditions. Ironically, the corollary is also often true: stocks often peak and crash when investors feel too confident and become complacent.
Let’s hope that old saying is true today, because there’s certainly a lot to watch for these days, as financial media constantly reminds us. Given this litany of global concerns, there’s a compelling case to be made that winter is coming — both from Mother Nature and in the investment markets.
So, what is the prudent long-term investor to do? Is now a good time to sell your equity portfolio?
My favorite analogy for equity investing is to compare investing in the stock market to growing a tree. As Warren Buffett once said, “Someone is sitting in the shade today, because someone planted a tree a long time ago.” To grow a tree, you plant some seeds, let nature take over, and just let it be for a while. Before you know it, you’ll find yourself tucked beneath the shade of your tree, lost in a good book.
My favorite takeaway from this analogy is that you don’t dig up the tree and store it in your garage when winter comes.
Check out our latest video, where we discuss why selling your equity portfolio is almost always a mistake, regardless of market conditions. Importantly, we also discuss the marvelous way your “equity tree” can produce a more sustainable yield for you over time — if you let it.
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Helping those you care about
The purpose of our “Great Investors” series is to help you become an outstandingly successful investor by following the principles of patience and discipline, which are necessary if you want to prosper as an equity investor. No doubt, “Mr. Market” periodically tests that patience and discipline by subjecting investors to emotional swings that can cause many to make a big mistake. Only those who faithfully adhere to a rock-solid investing philosophy will pass those tests.
Successful investing, while always fundamentally simple, will never be easy. You may have a family member, colleague, or friend who perhaps has not fared as well recently, and who you feel might have benefited from the sort of advice you were receiving. Should that be the case, we would certainly appreciate you introducing us to them. We very much enjoy working with you and would welcome the opportunity to offer the same level of planning and service to people whom you care about.
You are more than welcome to bring a friend or family member to our next Great Investors LIVE event, or to share a subscription to this article series.