Crossroads: Why This Is the Biggest Investment Decision You’ll Ever Make

 

Like many of you, I find myself at a crossroads with decisions.

Do we try for another child before it’s too late? Is it time to move house and realise a country dream? Can I do more to optimise my investing and that for clients?

Investing is ultimately a decision business. Which is why I guess you’re reading this. You need strategic analysis to make decisions that could make you money. And as with many such decisions, you only have a limited opening of time to capitalise on them.

Most of our monitored positions are well into the green now. With some returning 50%, 100%, and more. The market is also trending higher, meaning we need to tread carefully. Both in potentially adding positions and closing any existing.

Think about it: On the stock market, you buy a company because it has potential it is still working to realise. Profits it has still to increase. A dividend stream it has yet to pay — and grow.

Some say: ‘Well, trade in and out to make money!

That tends to be a zero-sum game unless you have specific knowledge that the market does not. It can also be costly in time and brokerage fees.

But, over the longer period, the stock market frequently misprices securities everyday. If considered over a longer period.

Long-term thinking is not only key to investing success. Having a clear conviction on where a business may be in a few years’ time is also key to wider economic success.

Dr Edward Banfield was an American political scientist at Harvard University. He spent 50 years studying upward economic mobility.

His key discovery was that ‘time perspective’ was ‘the determining factor of whether or not a family moved from a lower socioeconomic class to a higher one.’ The most successful people, Banfield found, ‘are intensely future-oriented. They think about the future most of the time.’

It is the same with investing. The most successful investors model and predict the future of the companies they are investing in. This alone can make it easier to make money over the longer term…

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Simon is the Chief Executive Officer and Publisher at Wealth Morning. He has been investing in the markets since he was 17. He recently spent a couple of years working in the hedge-fund industry in Europe. Before this, he owned an award-winning professional-services business and online-learning company in Auckland for 20 years. He has completed the Certificate in Discretionary Investment Management from the Personal Finance Society (UK), has written a bestselling book, and manages global share portfolios. Simon is a shareholder of Wealth Morning.


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