Nobody likes to feel foolish.
More, no one likes to be wrong about something they were so convinced they were right about.
Combine the two, and that’s a recipe for disaster – or, to provide a real-life example, how a good chunk of investors has felt during a bear market.
This most recent bearish downturn has been no different.
We talked about this on Thursday, where we dived into how even one of baseball’s Hall-of-Famers didn’t have a perfect track record.
Let’s apply what we learned to the investing world… with one example that might surprise you.
Patience Is a Superpower
Consider this real-world example of one well-known stock that subjected investors to numerous slumps on the way to delivering spectacular gains…
Eagle-eyed readers may recognize this example because I have mentioned it a couple of times previously…
Let’s call this example, “Stock X.”
If you had purchased Stock X 36 years ago (which is when the Bloomberg records on it began), you would have endured the following setbacks…
- 21% of the time, your stock would have produced an annual loss…
- 7% of the time, your stock would have produced a three-year loss…
- And on one occasion during those 30 years, your stock would have spent an entire decade producing a loss.
Think about that! How would you feel about holding a stock for an entire decade without making one single penny on it?
If that stock had been “Stock X,” you might have been okay with that particular setback.
Berkshire produced its success over a multi-decade span that included numerous setbacks, or “slumps,” along the way.
It’s true; if you had purchased Berkshire Hathaway 36 years ago and held that stock until the present moment, you would have endured numerous rough patches. Based on rolling 12-month calculations, BRK-A produced a negative annual return 21% of the time.
But those uncomfortable one-year episodes would have seemed like a day at the beach compared to the nearly 11-year stretch from June 1998 to March 2009 when BRK-A produced a loss!
One decade is a very long time to wait for a payday. It’s a very long time to be wondering why you hadn’t done something else with your money. Anything else.
And yet, during the last 36 years, combined, Berkshire shares have delivered a staggeringly large return of more than 18,000%!
During the identical timeframe, the S&P 500 Index produced a total return of about 3,900%. In other words, BRK-A produced more than four times the gains of the S&P 500!
Berkshire’s extraordinary investment results would not have been possible without a long-term time horizon. As Warren Buffett himself famously explained, “Our favorite holding period is forever.”
No one wants to endure a 10-year slump of zero returns. In fact, no one wants to spend any time at all losing money. But that’s an unavoidable part of the investment process.
Some of my best investments started as poorly as buying Berkshire Hathaway in 1973.
Back in 2002, for example, I recommended buying shares of Valero Energy Corp. (VLO). That stock tumbled nearly 50% during the next five months.
But within two years of recommending VLO, the stock had recovered to gain more than 50%. VLO would go on to post a 500% gain in less than four years – or 18 times more than what the S&P 500 delivered over the same timeframe!
Obviously, buying low is better than buying high. But astonishing gains can result from buying excellent stocks at less-than-ideal times. As Buffett has said, “It’s far better to buya wonderful business at a fair pricethan a fair business at a wonderful price.”
But without patience, a wonderful business will never deliver a wonderful stock market gain. Some things are worth waiting for.
Including one exciting development I’ve been working on…
Check It Out… Before It’s Too Late
Most of the time, I prefer to stay behind the scenes, analyzing the markets, so that I can pinpoint the kinds of stocks that can deliver market-beating returns.
That’s the only way I know to help my readers excel in the markets and turn their financial goals into realities.
So far, so good.
Those readers who’ve followed my recommendations since the ‘90s have had more than 40 opportunities to capture 1,000%-plus gains. But I think we’re just getting started. There are many more 1,000% gains to come.
And I present exactly why I believe that in my new A.I. investing summit.
During the event, I explain how I’m using A.I. to enhance my investing process and why it could lead to some of the biggest gains of my career. This system was engineered to find the stocks that are most likely to soar 100%, 500%, even 1,000% or more… no matter what’s happening in the overall market.
I’m so confident this system could help you beat the S&P by at least five to one over the next 12 months… and even help you make money during a market decline…
But don’t wait too long to decide. I’m pulling my video down at midnight on Tuesday, Nov. 21.
I’ll be back with you soon.