I read somewhere that investing is 90% emotional and the reason most people don’t achieve their objectives isn’t a lack of knowledge, it’s an excess of emotion. People fret too much over short-term performance, even though they supposedly say they are investing for the next 20 or 30 years. Your actions, or lack thereof don’t support your long-term plans.
After having suffered through 3 significant recessions as an equity investor, I learned in the first two what not to do and I was prepared for the last one. I knew I needed a clear and concise objective, not multiple objectives that might be in conflict with each other, but a single purpose, something I could apply a laser type focus on and I decided it would be the income stream. I came up with a Mission Statement and that statement is to build an income stream that is reliable, predictable and increasing. I was able to accomplish that even during the Great Recession.
A lot of you want growth and income and those objectives conflict. You are the people who will have a difficult time during the next recession. You haven’t learned the concept yet of owning high conviction companies and continue to hold them while ignoring price action. Price action don’t mean nuthin’ in the long game. Price action is temporary, the focus needs to be on the quality of the companies you own, that’s what is going to support you during the distribution years, and that’s why my main focus is the income stream. It grows regardless of market conditions and portfolio values don’t. Our portfolio values dropped during the Great Recession, yet our income flows from those companies that saw share prices drop saw income levels rise. It’s the income stupid that we rely on, so focus on it.
Manage your emotions or they will manage you.
Un optimista es un pesimista mal informado