First of all, let me start by stating that all the patience in the world won't help you with the buy and hold investing strategy. Remember, it took the stock market until 1954 to get back to 1929 levels. It took gold until 2008 to get back to its 1980 price. However, patience is still important. Just don't bother being patient if you have a bad investment strategy. For example, a husband and wife can have all the patience in the world on waiting to conceive but if their only strategy to get pregnant is to play footsy then their patience will be for nothing and totally pointless. Same thing with the buy and hold investment strategy.
One of the reasons I have begun to employ an exit strategy with all of my client's positions is for the purpose of making more money over the long run. The enormous drops that arise in all markets, whether you're talking real estate, commodities, precious metals, or stocks, is something that it is imperative to avoid in order for you to achieve great long term profitability. However, one of the things that hold people back from being able to realize profits is a lack of patience. People think only in the short term.
On TV, we see commercials where people that are recommending patience are being mocked and these commercials are implying that fortitude is not important and that investors should see their account grow every month or quarter. But the bottom line is, we expect the TV and media to tell us things to harm us. We have to look at the word of God to see what is the wisest, what is the best stance for us to take. Proverbs 14:29 says "A patient man has great understanding."
So as we look at commercials and we're on the Internet and we read magazines, we see advertisements to lose weight quickly, and this is usually not the best decision to make but it feeds off of our humanness. Our flesh and our desire to have something immediately and experience something right away is what the devil is counting on. So rather than having commercials and advertisements for eating vegetables and exercising, we see advertisements for taking a pill or putting together a shake or something of this nature where people will lose weight in a matter of days. That's because, naturally, we lack patience.
The same thing is true with investing. You know when you have exit strategies or when you have entry strategies in place or you're using market timing for investing, some of the moves you make are not going to be profitable. However, you will be able to catch trends over the long run when the strategy you're using has a winning track record and is a wise plan. Additionally, and what is going to help you make money and have the most money in your retirement account is to avoid the inevitable huge drops that materialize with every type of asset class.
For example, the S&P 500 is at the same exact value that it was back in March 1998. Even after this tremendous 50 percent rally we've had going back to March 2009, we're still at March 1998 levels. That's 11 years ago. There's no amount of long term approach that you can take with stock market investing that will fulfill the goal of making a solid profit using a buy and hold strategy. If you wait long enough and you invest long enough in the stock market and don't make a lot of changes and just leave it in U.S. stocks or leave it in any type of investment, you're eventually going to experience such a big drop that it will wipe out a decade or more of growth that you have experienced. The only way to avoid that is to have an exit strategy.
Finally, and most importantly, as we look at the word of God again, is an exit strategy prudent? Is an exit strategy wise? As we read the parable of the talents in the Bible it says, "Immediately the one who had received the five talents went and traded with them, and gained five more talents. In the same manner the one who had received the two talents gained two more." So I am convinced that trading and moving in and out of an asset class and having diversification are both Biblical principles. This isn't something that man has invented, and hopefully you can do your own research and see the benefit of being able to use the money that God's given you to avoid the huge drops that will come about in every single type of investment.
Here is a blurb from an email I received, from a client of mine, in February: "Things are going very well and very busy. I hope you and your family are well. I've tried to avoid thinking about my portfolio lately. It looks like I may have to work a few extra years before retiring. The Lord will take care of all these things, my trust is only in Him. May God bless you in all you do. Secure In Christ:"
By the way, when will the stock market get back to its year 2000 peak? Is your patience paying off? Right now your account would probably be double or triple what it is had you been using an active investment strategy that included a way out to avoid big losses. And the most important question of all is: Do you have an exit strategy for you investment portfolio moving forward?
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