Investing As Life

Quote of the day:
"I go about looking at horses and cattle. They eat grass, make love, work when they have to, bear their young. I am sick with envy of them."
--Sherwood Anderson

One of the first investments I made, some 26 years ago, was in the very successful Twentieth Century Growth mutual fund. Learning the investment philosophy of its founder, James Stowers, had a big effect on me.

Stowers said that to succeed as a stock-market investor you had to be in it. And stay in it. He wrote that the history of the stock market showed that most of the accumulated price increase came during a comparatively few, sometimes dramatic, trading sessions every year. And, despite endless prognostications from analysts, no one ever knew when these days would happen. No one. Ever.

Therefore, in order to capture this movement, he said, you had to be in the market, and stay in. If you attempted to time the market and buy low and sell high you’d wind up being out of the market for many of the “up” days.

If you think about it, this is why so many people make money in real estate. They buy a home and they stay in it. Or they sell one and immediately buy another. This is why they’re in the market for all of the “up” months or years. Because it’s not a liquid market, time is measured in months or years, rather than days or weeks.

All this is an intolerable big yawn to fast-money “I’m-smarter-than-everyone” types who think jumping in and out of investments indicates advanced intellect and superior manhood. They often tout some good results they or someone they know had recently. But how many of these people do you still read about 26 years later?

Note: Twentieth Century has changed its name (to American Century) and expanded its mutual-fund offerings from two to a few dozen. James Stowers retired long ago, a very wealthy man.

As is often the case with investing, this is a great metaphor for life. In order to appreciate life, you need to be “in” it--and stay in it.