Long-term thinking is easier to believe in than accomplish, but it’s more lucrative than many people imagine. To do long term effectively you have to come to terms with a few points. 1. Long term thinking is harder than most people imagine, but is more lucrative.
Saying you have a 10-year time horizon doesn’t exempt you from all the nonsense that happens during the next 10 years
Everyone has to experience the recessions, the bear markets, the meltdowns, the surprises and the memes at the same time.
- Your belief in the long run isn’t enough. Your investors, coworkers, spouses, and friends have to sign up for the ride
Long term is less about time horizon and more about flexibility
The more flexibility you have the less you need to know what happens next.
- Time is compounding’s magic, and the odds of success fall deepest in your favor when you mix a long time horizon with a flexible end date.
Patience is often stubbornness in disguise
Long-term thinking can become a crutch for those who are wrong but don’t want to change their mind
- The only solution is knowing the very few things in your industry that will never change and putting everything else in a bucket that’s in constant need of updating and adapting
It’s hard to know how you’ll react to decline
How would you feel if stocks fall 30%
- You probably picture a world where everything is the same as it is today except stock prices are 30% lower.
- In that world it’s easy to say, “That would be fine, I’d even see it as an opportunity.”
