Legendary investor Warren Buffett one said, “There seems to be some perverse human characteristic that likes to make easy things difficult.” That’s especially true in investing. In essence, you just need to do three things, advises Bill Patalon, chief stock picker at Stock Picker’s Corner.
At some point, everyone who starts diving deeper into the investing world hears about options trading, candlestick charts, and tracking resistance and support levels. If that isn’t part of your approach, it’s easy to feel you’re missing something. Even worse, it feels like you are doing something wrong.
Going back to Buffett’s quote, investing is a lot simpler than all of that. There’s a little bit more to it than what I’m about to share. But, in essence, you just need to do three things:
- Identify the forces shaping the world, and that will lead you to the best stocks.
- Invest in those stocks.
- Give yourself time to hold those stocks to maximize your returns.
It’s true that the first part takes time and research, but the end result is always worth it. Morgan Housel, a financial writer and investor, has an excellent, easy-to-understand investing resource – his book Same as Ever: Timeless Lessons on Risk, Opportunity and Living a Good Life.
In his research, he found that the optimal time for holding a position is “probably around 10 years or more.” This shows the longer you hold a stock, the more you’re increasing your opportunity to earn a positive return.
Of course, there will always be exceptions, as everyone eventually picks a bad stock or two and sometimes holds on for too long. But you don’t have to constantly move in and out of stocks and try to time the market.
