-- Ben Franklin
In the stock market it’s easy to make money. Really. And in the stock market it’s easy to lose money too. The only hard part is holding on to your hard earned money. That's near impossible.
There’s an old adage on Wall Street that says if you want to double your money, fold it in half and put it back in your pocket. There’s a lot of funny wisdom like that floating around the investing community that was learned through financial misery.
Investor’s make most of their money by doing nothing. That’s right, doing nothing. When I finally discovered that fact I knew this was the type of career/hobby I wanted for myself. But doing nothing is not natural and to gain the skill and expertise to do nothing takes years and years of practice. In fact, as you get older and start to take naps during the day, it’s a sure sign you’ve perfected this advanced skill of doing nothing. And at that point in your life you’re a natural born investor.
Patience will make you wealthy. But what are the techniques involved in mastering this skill. Well, napping is one. Sitting on your hands is another. Having teenagers will surly teach you patience as well as try your patience. And sitting outside a restaurant with one of those little boxes waiting an hour or so for those little lights to swirl to let you know your table is ready will certainly help you learn patience.
But patience will not get you to the promised land by itself. Thinking is also involved. So if thinking and patience are not your thing, investing is probably not your thing either. Maybe your future is in commodities, like recycling aluminum cans.
Thinking is important because thinking is that difficult process by which you determine which company or companies you’re interested in. Thinking involves pulling together all your research, screening, and decision making processes into one specific action -- buying the right stock. I’ve discussed this earlier in a post entitled Finding the Right Stock and if you need to review it you can find it here. Thinking will also crystalize why you bought a particular stock when doubts enter your mind later on down the road.
Patience is important because it is what gets you into the right stock at the right price and keeps you from overtrading. Commissions are the bane of traders and overtrading just increases the number of commissions you’ll end up paying. Brokerage houses love traders because they make a living charging commissions on trades. Investors make a living by collecting dividends. Investors become wealthy by watching their stocks increase in value as they hold them. Investors get rich through patience.
If you find and buy the right stock at the right price there’s no reason to ever sell it. Just collect the dividends and watch your wealth grow.
Live long and prosper.