You have been sold a lie…
The idea that to perform well in the market you need to constantly buy and sell stocks is simply not true.
But don’t get mad at your financial advisor or the financial media just yet. The truth is most of them believe this untruth as well.
ARK Invest is known for targeting high-growth technology companies, with one of its most recent additions being DraftKings. In an interview with Maverick's Lee Ainslie at the Robinhood Investors Conference this week, Cathie Wood of ARK Invest discussed the firm's process and updated its views on some positions, including Tesla. Q1 2021 hedge fund letters, Read More
People tend to equate activity with performance. The more you are doing, the better you will be. That’s not true with investing. In fact, the less you do, the better off you will likely be.
“An investor should act as though he had a lifetime decision card with just twenty punches on it.” – Warren Buffett
The more you trade, the less time you give your investments to compound your wealth. The average equity fund has a portfolio turnover ratio of nearly 100%. They trade almost all their stocks every. single. year.
There is a fund that has not bought or sold a single stock since 1935 – The Voya Corporate Leaders Fund (LEXCX).
Note: Technically, the fund does buy stocks as people join to balance the portfolio, but it doesn’t add new names to the portfolio.
Amazingly, this fund has outperformed the S&P 500 since at least 1970. That out-performance came from doing nothing, and letting great businesses compound wealth. The image below shows the company’s performance:
The fund is filled with high quality blue-chip stocks like AT&T (T), ExxonMobil (XOM), and Procter & Gamble (PG).
I’m not saying to rush out and buy the Voya Corporate Leaders Fund (though it is a great choice as far as funds go)… The point is that buying great businesses and holding for the long run works very well – despite all the pressure from financial media to buy and sell securities.
The Sure Dividend Newsletter are designed to sell very rarely. The only sell rules are if a stock reduces or eliminates its dividend, or if it becomes extremely overvalued (adjusted P/E > 40).
This results in very few sells so your money is left in great businesses to compound for the long run.
Click here to start your free trial of the newsletter to find the 10 best dividend growth stocks today to hold for the long run