Investing Tip #4: Hang In There

Having a time-tested process is crucial to long-term investment success.  (See my last post here: http://www.mackcourter.com/blog/investing-tip-3-have-process)  This sounds obvious, but once you have a process you need stick with it through thick and thin. 

No matter what the investment strategy, there are times when it underperforms.  When those unfortunate times occur, it is easy to second guess the process. 

Believe it or not, many people have doubted Warren Buffett a time or two.  You may recall the dot.com bubble in technology stocks in the late 1990’s.  Many folks were willing to pay insane prices for stocks that weren’t even turning a profit.  It was so addictive that companies were adding .com to their name and instantly seeing their stock prices double.  

The most notable investor who didn’t get caught up in this mania was, of course Warren Buffett. 

Over the three years between March 1997 and March 2000, the tech-laden NASDAQ went up almost 400 percent.  Buffett’s company Berkshire Hathaway however, was “only” up 63 percent during the same time.  These results were so disappointing that it led the Wall Street Journal to question whether Warren Buffett should retire.  (What’s Wrong Warren? December 27, 1999 issue). 

Of course, now it seems rather ridiculous.  Berkshire is up 125 percent since then while the NASDAQ is still down 11 percent.

Thankfully for Warren and his shareholders, he didn’t ditch his process when it was underperforming.  He hung in there through the bad times.      

Having an investing process is the key to reaching your goals.  Sticking with the process is just as important as the process itself.