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The Time To Worry About Shares

If it’s not one thing then there will always be something else that could stop us from investing.

Some of us will always manage to find an excuse as to why now might not be the right time to buy shares.

There’s always something to worry about…

It could have been the uncertainty caused by Brexit. It could even be the Zika outbreak.

The again it could have be the attempted coup in Turkey or speculation about the slowdown in global economies. It could be whether Donald Trump will be elected as the next president of America.

That is not to say that any of those events are trivial. Nor is it to say that they might not have an impact on markets. All of them might.

But we have to understand that the market hates uncertainty. There is nothing earth-shatteringly new in that revelation.

Beans, shotgun and gold

The market has always hated uncertainty. And in the face of uncertainty investors tend to head for cover, head for bonds or head for a log cabin in the hills with a tin of beans, a shotgun and a bar of gold.

But for the long-term investor, nothing should matter very much. And few things should matter at all.

The key to long-term investing is to focus on what an investment could look like in another five or ten years’ time, if not longer. When we buy a share, we should be aiming to hold that stock forever.

Warren Buffett once said: “We should buy so well that we should never have to sell.” That should be our investing mantra. It is mine.

Price matters

Some companies in my portfolio have been with me for so long that they have started to sprout whiskers. But what is interesting is that they are as worthy to be in my portfolio today as they were two decades ago.

Although the shares are worth many times more now than when I first bought them, they are still worth buying.

Point is, we should never fixate on the price that we have paid for a stock, regardless of whether it is higher or lower after we first bought it. That price matters to nobody except you.

When we invest we should try to envision the company at some point in time in the distant future. Admittedly, it is not easy to predict the future for every company.

Things go better with Coke

But that is precisely why the core holdings in our portfolio should be made up of businesses whose performances are as predictable as possible.

Warren Buffett once said: “If you gave me $100 billion and said take away the soft drink leadership of Coca-Cola in the world, I’d give it back to you and say it can’t be done.

He is right. It can’t be done.

It is almost impossible to unseat one of the best-known brands. It has taken Coca-Cola over a century to establish its brand leadership. What’s more, its performance can be as predictable as sunrise.

Another Coke

There are many more companies besides Coke that exhibit those strong characteristics of predictability. Some of them exist right here in the Singapore market. They could include Straits Times Index (SGX: ^STI) stalwarts such as Singtel (SGX: Z74) and Jardine Matheson (SGX: J36).

It should be our mission as long-term investors to look for those companies. We may even have some of those in our portfolios right now.

Those are the stocks that you might want to consider keeping for the long term, even if the price is considerably higher than when you bought it.

They say you never go broke taking a profit. That’s true, you won’t. But as Peter Lynch once pointed out: “You won’t improve your results by pulling out the flowers and watering the weeds”.

A version of this article first appeared in Take Stock Singapore. Click here now for your FREE subscription to Take Stock - Singapore, The Motley Fool's free investing newsletter.

Written by David Kuo, Take Stock - Singapore tells you exactly what's happening in today's markets, and shows how you can GROW your wealth in the years ahead.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.