The Big Money
Here is a question for you.
Where do you think the big money is made in the stock markets?
It’s not a trick question. It’s a simple one but mind you it’s not easy. And this question is even more important now as the stock markets have made a new high.
I will let you reflect for a few minutes.
If you think like most people think, chances are you would have answered…
It’s in the Buying (when you buy) or It’s in the selling (when you sell) – Essentially market timing.
A few financial professionals used a technical word- rebalancing (which according to them helps in some form of buy low sell high – not exactly buy low and sell high but some unemotional form of it).
None of these answers are actually correct when it comes to big money.
Charlie Munger said it best – ‘The big money is not in the buying and the selling, but in the waiting.’
Waiting does not mean waiting for the right time to invest…Waiting means staying invested (through the natural ups and downs of the stock market) and letting the power of compounding to work for you.
If this is true, which it is, what are you going to do – buy, sell, stay invested or a combination of everything?
P.S.: The answer is more nuanced depending on your personal situation. Thus, I think I should do a post on this topic…What do you think? Is there any other topic that you want me to write about?