Markets

Green Fisher: “The Long-Term Plan Matters”

For most investors, the long-term return on the stock markets is more than sufficient to achieve their own investment goals. Only the fewest agree with the way there. The high volatility is nerve-wracking …

Discipline in uncertain times

For most investors, the long-term return on the stock markets is more than sufficient to achieve their own investment goals. Only the fewest agree with the way there. The high volatility drains the nerves, painful downward phases and seemingly endless dry spells must be overcome. Nevertheless, it is and remains a successful concept to define a long-term strategy and to maintain this route. Why is it so difficult when it sounds so easy?

Hide emotions

For a relatively simple reason: The long-term investment plan can very often feel wrong, even if it is fundamentally correct. If you want to exhaust an investment horizon of ten, 20 or more years and are free of short-term commitments to invest, you have the right prerequisites to strategically plan long-term success with stocks. However, this plan is put to the test almost every day.

There is “merciless” transparency on the stock market, fluctuations in the portfolio can be observed in real time on every trading day. The market movements are framed by extensive media coverage. Anyone who, as an investor, feels the need to be informed daily can access huge amounts of data and get thousands of opinions. Everything will be terrible, everything will be wonderful, this time everything will be different – there are no limits to the interpretation. So how do you manage to stay disciplined and hide the unimportant noises? By invoking the long-term investment plan again and again and asking yourself the crucial questions: What investment horizon do I have? Why did I choose the asset class allocation and does it fundamentally fit my investment objectives?

Often there is no danger from the crash itself

There has always been a risk of throwing the long-term plan at the wrong time. Exactly when the emotional pressure is at its highest: in sharp downward phases, in terrifying and uncertain times. The long-term plan may even feel extremely wrong here. The monetary “reward” for resilience doesn’t always follow. In the past few months, the market has once again managed to get many investors to say goodbye to stocks – and one can confidently assume that many a long-term strategy has been thrown off course. The rapid market recovery after the Corona crash has reconciled many investors, rewarded the patient market participants and raised new hopes. But that’s not what it’s all about – in the short term, the stock market can still beat some capers and rob investors of the last nerve. New lows can be set, market recovery can be delayed, new problems can arise – who can say that with certainty?

Conclusion

With discipline and patience for long-term investment success! Sounds boring? Perhaps you will be able to completely capture upward movements on the stock market and avoid downward movements with precise timing. Admittedly, you beat the long-term stock market return by a long shot, you don’t need to be disciplined and patient, and you certainly don’t need any strategic advice. Otherwise the following applies: Those who think about their long-term investment strategy in critical market phases increase their chances of success.

You can request the current capital market outlook from Grüner Fisher Investments at free of charge.

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