During his recent interview with Bloomberg Línea, Howard Marks explained why you don’t make money buying and selling, you make money by holding. Here’s an excerpt from the interview:
Marks: I’m not a psychiatrist. But I think that first of all, establish that as a goal. Secondly, recognize when you’re getting too excited or too depressed. Third, maybe write down some notes. My goal is to be steady and have some mechanisms: maybe if you have a thought to buy something, say to think about it for a day and decide tomorrow. Just don’t react to the spur-of-the-moment (under) emotional influences.
I think you can’t jump in (into jump trading), you can’t do a good job. You have to be thoughtful and have to be composed. You don’t want to go to a doctor that gives you a different medicine every day.
Or a lawyer that gives you different advice every day. It’s very important when people are trying to be good investors, to be stable, steady, and not change their minds from day to day. You can say that you can only trade on Thursdays.
The other days you should stick. More thinking than trading. Investors have to learn that you don’t make money by buying and selling. You make money by holding. It’s what you hold that makes you money.
You should figure out what to hold in a very conscious way through research and thinking about the long-term things that are important and not get in and get out every time. I’d suggest finding a few good investments based on a serious analysis of the long-term future and holding it.
You can read the entire transcript of the interview here:
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