Patience of Time

Over the last 80 years, the stock market is up about 9% a year. Warren Buffett, the most prolific investor of our age, has averaged a robust 16% a year since 1990. Yet some people expect to make 300% in a few months? Come on!

It is next to impossible to “time the market” or make a lot of money in a short amount of time. It has been proven that those who simply buy and hold beat short-term traders (who hold for between a month and a year) 99.8% of the time.

So before you ever put your money in a stock, ask yourself if it is a business you don’t mind owning for two, five, even 10 years. Does the thought of holding a stock that long scare you? Is there a good chance the business won’t be around that long?

If the answer is yes, you may want to reconsider your investment idea. Sounds like the stock is highly speculative -- and may not deliver those remarkable gains you hope for.

Final Thoughts

At the end of the day, investing is a difficult task. You have so many choices. You are bombarded with so many different ideas. And there are a ton of traps waiting for you around every corner. But if you do nothing more than pass each stock idea through these three tests, you will not only avoid many of the pitfalls, you will see far better results -- over time.

What more can you really ask for?