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Treat Your Investments Like a Cash Machine and Not a Slot Machine
How do you make money with your investments? There are two basic strategies. One is to pick a solid investment based on strong intrinsic value and hold for the long term. The other is always to follow the old adage to buy low and sell high. The first approach assumes that timing the market is difficult and not worth the risk. The second approach uses a lot of technical analysis in an attempt to time the market. Our suggestion is that for the long haul you should follow the first approach for the majority of your investments. You should treat your investments like a cash machine and not a slot machine. That is to say, stick with what you know, repeat what is profitable, and do not gamble.
Treat Your Investments Like a Cash Machine and Not a Slot Machine: Long Term Value Investing
On the average, money invested in the US stock market has accumulated value decade after decade for more than a century. Individual stocks rise and fall but the overall market goes up. Successful long term investors pick stocks and stay with them. We wrote about how many years are required to make an investment long term? The answer is that to take advantage of the long term appreciation of the US stock market you need to stay with your investments for 5 and 10 years or longer.
The point is that well-chosen stocks represent well-run companies with strong products. These companies will make money year after year. And they typically have a margin of safety in the form of property and cash in the bank instead of excessive debt.
When you pick solid stocks for the long term you treat your investments like a cash machine and not a slot machine.