Last week we talked about how consistency is the key to success.
Success usually doesn’t come from one massive accomplishment. Rather, it comes from many small accomplishments made day after day after day.
All the little accomplishments accrete. That is, they build upon one another. Then one day you wake up and realize they have compounded into something truly impressive.
The same principle applies to investing. It’s a simple thing – but I don’t think this is well understood today.
When I was a young professional, I thought investing was about hitting it big. So I was obsessed with trying to time the stock market. And I primarily invested in the riskiest stocks I could. When I found one with a good story, I would put a big chunk of my investable money into it.
Then I would start counting my gains prematurely. I would think to myself – if it doubles, I’ll turn my $10,000 into $20,000. If it triples, I’ll have $30,000. But what if it’s a ten-bagger? Then I’ll have $100,000!
Of course, it never worked out as well as I had mapped out in my head. Because that approach isn’t investing… it’s speculating.
An investor doesn’t think in terms of hitting it big. He (or she) thinks in terms of compounding money over long periods of time. That’s Einstein’s secret to wealth.
Further, investors always have an investment thesis in place for every position they hold. They know why they are holding each position. They understand the valuation and key performance metrics. And they know what signals to look for to determine when it’s time to sell.
These things are far more important than timing the market. If the valuation is good and the thesis is sound, the timing is right – regardless of what the nominal purchase price happens to be.
And that brings us back to consistency.
I’ve had far more success in building a robust asset portfolio over time than I ever did speculating. In fact, my experience is that if you’re deliberate about buying quality assets on a regular schedule, it’s impossible not to make money and build wealth.
And it all snowballs over time. Little investments add up to big pools of capital. That’s the key.
Tomorrow we’ll talk about how to create a system for this… and exactly which investments to make right now.
-Joe Withrow
P.S. If you would like to get a jump on building out your own investment system, our Financial Consistency Bundle can help. More information on the program right here.