Can you believe that $1,000 invested now in some young guns, meaning companies that have had an Initial Public Offering recently, will turn into about, say, $1 million in 50 years or so?

No really, can you believe it? Choose a firm that has a leading-edge management team and a unique portfolio of solutions; by unique, we mean these products or services are so good the firm essentially has no competition. Read “From Zero to One” by Peter Thiel to get his take on the value of monopolies, which command higher margins. Make sure of course that the firm as a result can and will accrue very high sales and earnings growth over the years, and that you pay a reasonable price for the privilege of owning it.

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The beauty is, you don’t even have to time the market before buying. And you know what? It’s good news because nobody can. When will the next bear start? Your guess is as good as mine or anyone else’s for that matter. In “Becoming Rich: The Wealth Building Secrets of the World’s Master investors Buffett, Icahn, Soros” – a must read for anyone interested in investing in stocks – Mark Tier rightly reminds us that there are a number of deadly investment sins, one of which is “believing that you have to predict the market’s next move to make big returns.” Billionaire investor Warren Buffett does not sell his Wells Fargo (WFC), Coca-Cola (KO) or IBM (IBM) holdings contingent on what he believes the indexes will do tomorrow or next year. Seen another way, an investor in Microsoft (MSFT) or Google (GOOG) since their Initial Public Offerings years ago only had to hold to his or her original investment to build a fortune. No need to time the market, buy or sell on (dubious) cues! Of course, it is best to start positions or invest in firms, new and otherwise, when the market is depressed and shares cheap. During the 2008 financial crisis, many astute investors including Warren Buffett were buying when the world was selling. But that’s another story…

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Once you’ve selected an issue, the rule is, hold on to it like dear life. Don’t sell because you’ve made 20% after three months or 100% after two years. True market winners will keep rising for… decades. Coca-Cola and Microsoft are still around, aren’t they? Granted, billionaire investor George Soros, unlike Warren Buffett, tends to sell a holding if the shares acquired start behaving in an unforeseen way (i.e., go down if he’s long). It’s called risk control and capital preservation, a key ingredient of any master investor’s methodology and philosophy. If you believe you have made a mistake, then you may sell. (You can always re-buy the stock later on.) Of course, a great company bought at the right price should not sell off, but the market can be unpredictable… Warren Buffett tends to hold the stocks he buys forever, or at least as long as his criteria for buying the shares in the first place remain in place.

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Hold on to your shares and fifty years later, maybe you can treat someone at FUNanc!al for coffee or something. Lucky you!

Incidentally, these things aren’t about luck. It takes hard work to pick the rightt socks and understand markets, and plenty of nerves to survive bears (that is, declining stock prices).

Have fun and get filthy rich!

And please visit us at FUNanc!al, www.funanc1al.com for great stock market fun and a unique perspective on everything financial.

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