In his recent interview with The Market, Howard Marks explained why investors need stamina to resist the temptation of responding to short-term influences. Here’s an excerpt from the interview:
In the memo I Beg to Differ I make the point that you have to do something different from others if you want to outperform.
So when everybody else is a short-term investor, you should become a long-term investor. You can get a big advantage that way.
When you think long-term, volatility doesn’t matter. Let’s say you come into a bunch of money and you go out and buy Sixt, the car rental company. You are not going to look in the newspaper every morning to see what it’s worth. You are going to operate it, rent cars and make money.
The fact that stocks are public causes people to be concerned with daily prices. So if you’re convinced a company is a good company, you should buy the stock, put it into the drawer and only look every year end at the prices.
What you need is sitzfleisch: The stamina to resist the temptation of responding to these short-term influences. Of course, that’s easier said than done, but if you want to do a great job as an investor, you have to do things that are easier said than done.
Look at Warren Buffett. He treats shares of a stock not as speculative objects, but as a piece of a corporation that you are going to own for years because you believe in it. If that’s true, then why look at the price every morning?
You can read the entire interview here:
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