Holding Hurts

I have given countless examples of stocks that, had you or your parents or grandparents invested in, could have made you incredibly wealthy.

The list consists of companies like:

1. Southwest Airlines (NYSE: LUV)

2. Comcast Cable (NASDAQ: CMCSA)

3. Home Depot (NYSE: HD)

4. Walmart (NYSE: WMT)

5. United Healthcare (NYSE: UNH)

6. Apple (NASDAQ: AAPL)

7. Microsoft (NASDAQ: MSFT)

8. Cisco (NASDAQ: CSCO)

9. Netflix (NASDAQ: NFLX)

10. Amazon (NASDAQ: AMZN)

An investment in any one of these companies in the early stages could have made your family very wealthy.

However, there is one assumption that I am making.

And it’s a big one.

Would the individual entrusted with managing these investments have had the discipline to have not cashed out early?

That’s a very tough question to answer.

For example: let’s say you’ve invested $1000 in a company, and your value is cut in half. You wouldn’t like it. But it wouldn’t be the end of the world.

How would you react, though, if your $100,000 portfolio got cut in half?

That’s a totally different ball game.

In a scary bear market, it would be absolutely understandable if you sold your position to preserve your $50,000.

But in all likelihood, it would probably not be the best choice, given the history of the stock market.

That’s why, in my opinion, holding is the hardest and most painful thing to do.

Taking a 50% profit is easy as is selling a loser is, in the moment.

The one skill that will enable you to make generational money is your ability to hold.

Think of an investor like Warren Buffett,or my mentor, David Gardner.

David Gardner bought Amazon in 1997 when it was $36 a share and has held it for decades. He is up tens of thousands of percent on that investment.

Throughout that period, Amazon had lost 59% of its value twice.

How many of you think you could have stomached losing half your money on two separate occasions?

I’m not talking about losing thousands. I’m talking about being down six figures.

Not easy, I bet!

So you need to know, up front, that holding can and probably will hurt at some point.

Just remember that it’s part of your Wealthy Joe journey.

 

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

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