10 Minute Read

Tales of a Technician: Of Legacies and Long-term Investing

September 14, 2020

By | 3 Comments

When I first start trading, I was caught in the trap of “short-termism.” My focus was on what the market was doing over the next few minutes or days. Without realizing it, I was playing in a low probability environment that required a high skill level. Instead of embracing the powerful odds of a rising tide, I was betting on the ebb and flow of each wave.

Then I had kids and everything changed.

Investing for the future becomes clear and present when you start to think about posterity. My time horizon shifted from days and weeks to decades, even multiple generations. Do you know how powerful investing $1 today becomes when you look at the potential for growth over decades? It’s utterly incredible.

For me, the easiest way to embrace bear markets, to look upon them fondly, is to set your sights on the long, long run.

First, it allows you to weather the downturn without panicking and selling your stocks.

Second, it trains you to buy when stocks are on sale. To those with the proper mindset, sinking prices are viewed as a godsend that triggers greed, not fear.

Perks of a Long-term Perspective

Rightful Owners

The following quote is attributed to J.P. Morgan,

“In bear markets, stocks return to their rightful owners.”

Warren Buffet, the Oracle of Omaha himself, said something similar.

“The stock market is a device for transferring money from the impatient to the patient.”

There’s no way that a trader obsessing over the market’s movement over the next week will hold through a bear market. Their shortsightedness will inevitably shake them out.

If my time horizon is decades, why again should I care if the market suffers a temporary 30% decline? I shouldn’t! It’s a blip on the long-term radar. I find that when such trying times arise, reminding myself of my goals and plan helps to ward off the temptation to panic.

The rightful owners of a stock are those have the wit and will to withstand the ravages of volatility and bear markets. I want to be one of them.

Never Waste a Crisis

I first heard the phrase, “Never let a good crisis go to waste,” in 2008. It works in the political sphere to get legislation passed when the public is clamoring for action. But it also applies to the field of investing.

Bear markets don’t come around that often. Historically we get a good 20% to 50% decline only once or twice a decade. These rare events usher in golden opportunities to grab equities at fire-sale prices. If my objective for purchasing stocks is to fund my kid’s college in 15 years, then do you think I’d rather buy shares at record highs or 30% off the peak?

Or, if my goal is to grow my wealth to adequate levels to generate sufficient annual income to fund my retirement in a few decades, then which do you think helps me reach that goal quicker? Why, buying at the massive discount, of course!

Legal Disclaimer

Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.

All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.

3 Replies to “Tales of a Technician: Of Legacies and Long-term Investing”

  1. Avatar Fuad says:

    As Benjamin Graham said: “In the short run, the market is a voting machine but in the long run, it is a weighing machine.”
    If you invest in good businesses, the weighing machine will appreciate the value of these good investments.

    Thanks again for a great reminder to think of the long term.

    1. Tyler Craig Tyler Craig says:

      Love that quote. Thanks for sharing, Fuad.

  2. Avatar ValentinaSalge says:

    Great post, Tyler. Thanks!

Leave a Reply

Chart Modal

Tackle Trading