The Real Secret to Long-Term Investing

During their recent episode, Taylor, Carlisle, and Chris Mayer discussed The Real Secret to Long-Term Investing. Here’s an excerpt from the episode:

[Chris] Well, I mean, the sirens kind of, you know, metaphorically for anything that is calling us off the course of holding on to our investments. So, you know, all the media that we have to put up with as investors all the time wants us to take action. That’s sort of the bias, right?

Every financial programme or show or newsletter or whatever always makes it, makes it want to seem that whatever’s happening now is really important. And, you know, you have to do something about it now. All these headlines about things that are happening.

And so those are the sirens, those are the things you have to sort of ignore. You know, if you’re going to own a business for a very long time, it’s a lot about ignoring the things that don’t really have much to do with your business over the long period of time. So that’s really a good metaphor for the sirens.

What’s the secret to ignoring it? Yeah. And there’s a lot of, I mean, there’s no secret per se.

I think a lot of it’s commonsensical. And I go through some of them.

[Jake] Asking for a friend, right, Toby?

[Chris] Yeah, right. And go through, you know, I go through a number of ways in the book and some of them people have heard me say before, you know, focussing on the business itself and, you know, every business you can probably boil down to a handful of key essentials and just tracking those things. And as long as those things are, you know, within a reasonable range of performance, that you expect, then you continue to hold on.

And there are a lot of bad habits investors pick up on as well. So, you know, checking stock prices every day or multiple times a day would be, you know, one. Doing that makes stocks seem a lot more volatile than they are.

And like I said, those little blinking, you know, green and red colours are kind of calls to action. So you don’t want that. So you have to avoid those temptations and you have to regulate your, you know, what you pay attention to.

So there’s a lot of, and I talk about this in the book, years ago, I used to read like, you know, every day I’d read the Journal of Financial Times, I’d read all this stuff. And, you know, now I don’t do any of that. So you can cut back on your media diet as well, which helps from getting too distracted.