Go Ahead, Be a Quitter

When I was growing up, one of the worst things that could be said about you was that you were a quitter. But being a quitter has gotten a bad rap. I’m here to speak up for quitters everywhere, letting you know that quitting can be a good thing.

After all, it’s good to quit doing bad things, right? And it’s only bad when you quit doing good things. That seems clear. Where it gets murky is discerning which things are good and which are bad. This can also be a challenge in the area of investing. Fortunately, I’m here to save you from hopeless confusion. Here are a half dozen things that are definitely in the “bad” camp. If you haven’t already, you can immediately:

Quit standing on the sidelines. Compound interest is a powerful engine of growth, and it runs on the fuel of time. You want all the time on your side you can possibly get. Of course, you also want good returns. Based on 100+ years of history, we know the best returns come from owning well-managed, growing businesses. For the average person who wants to grow his or her surplus capital at a rate that’s faster than inflation, stocks are their best option. Regardless of whether you think you don’t know enough about investing (that’s what we’re here for), it’s time to become a part-owner of corporate America. Quit waiting for a low-risk entry point. It’s doubtful you’re going to recognize a “low-risk” entry point when one arrives because capital risk is low when emotional risk is high. When the economic news is worrisome, stock prices are lower. And buying at lower prices reduces your capital risk. Actually, every day offers a low-risk entry if you’re committed to at least a five-year holding period — since World War II, a diversified stock-fund portfolio (50% large companies, 50% small companies) has lost money only 5% of the time. Over a 10-year period, it’s even more rare to post a loss. On the positive side, about one of every six of those five-year periods saw gains of 20%+ per year. Quit looking for a reason to sell. Ignore the gloom-and-doom scenarios from the pundits. Even in the best of times, there are always economic and market negatives. The biggest risk to your future financial security isn’t a bear market. It’s inflation that eats away the buying power of your dollar. And the way to beat inflation is to make a significant long-term commitment to common stocks. Since 1926, stock prices have gone up in seven years of every 10. When you pull money out of your stock funds in anticipation of a bear market, you’re going against a powerful long-term economic uptrend. Quit making things needlessly complicated. You don’t need to read economic forecasts, technical analysis, or annual reports. SMI Basic-level members have access to our Just-the-Basics strategy, designed for simplicity and ease of implementation. Our Upgrading strategy is only slightly more advanced. Dynamic Asset Allocation (available to SMI Premium-level members) is also easy to understand and offers less market risk. Just pick one of these and follow theroad map we give you. There’s always more you can do, but you don’t have to do more to get inflation-beating long-term results. Quit obsessing over your short-term results. Frankly, you’re better off if you don’t even know what your short-term results are. Tracking your holdings on your computer or smartphone so you can get updates on your portfolio’s value is a terrible idea. It breeds impatience, leads to temporary emotional highs and lows, and stimulates a desire to trade more than you should. In short, it makes it much harder to stay with your long-term plan. Look at it this way. If you received constant feedback on your home — what it was worth, how its value changes monthly in relation to market trends, and detailed reports on how it compares to your neighbors’ homes — eventually you would become disenchanted with your home. The reason you don’t need to know these things is that you consider your home to be a long-term investment. You should view your portfolio with the same healthy perspective. In short, then — stop procrastinating, get in the game, stay in the game, keep things simple, and think long-term. And here’s number six: Quit worrying. After all, “God has not given us a spirit of fear, but of power and of love and of a sound mind” (2 Timothy 1:7 NKJV). So, honor God, apply His principles, trust His sufficiency, give generously, and rest in His peace. Image used with permission