Settle Down and Marry a Nice Stock

Many investors can share nightmare tales from their initial trading days. I certainly have mine.

My early approach involved risky penny stocks paired with 10x leverage.

My investing journey didn’t start with a grand success story. In fact, few people experience that.

Mistakes are often the greatest teachers in investing.

A Glimmer

Before becoming a writer, in the early 2000s, I operated a solo marketing consultancy focusing on creating Google advertising campaigns tailored for small businesses.

This venture was quite rewarding, and it gave me intimate knowledge of Google’s platform. At the time, few recognized how revolutionary their product truly was.

Google went public in 2004 at a split-adjusted price of $2.13 per share. I purchased shares in 2005, around $5.25 each.

Over the years, I added more Google stock during market dips. I was confident in the company’s potential because I used its products daily. I grew deeply attached to GOOG.

Ultimately, I held those shares for 15 years, selling (somewhat prematurely) in 2020. At one point, Google represented over 60% of my portfolio. That felt comfortable because I knew the company inside and out.

This illustrates what I mean by “marrying” a stock. You invest in a business you truly understand and increase your stake on pullbacks. That’s the ideal way to engage with the stock market.

Warren Buffett famously stated his perfect holding period is “forever,” and with time, I appreciate that perspective even more.

Lessons

After several years of “investing,” I had to step back and reassess my approach.

I compared my IRA (long-term) account to my active trading portfolio. The contrast was dramatic.

One steadily grew, while the other seemed like a money pit.

The reality was I wasn’t ready to trade back then. Being in my early 20s, I lacked the necessary knowledge, patience, and skills. This is a common mistake, especially for novices. Frequent trading without experience almost always ends in losses.

For seven years, I refrained from any trading and focused solely on long-term investments—and it paid off.

Eventually, I cautiously resumed trading but approached it with careful strategy. Here’s how I keep things balanced now.

A Smarter Path

Back in 1960, the average stock holding lasted about 8 years and 7 months. Now, it’s a mere 7 months. Long-term holdings have become a rarity.

This is exactly when going against the tide can be beneficial.

I firmly believe a portfolio’s foundation should consist of long-term holdings.

Holding investments over extended periods allows gains to compound uninterrupted by taxes and helps remove emotional impulses from decisions—both crucial advantages.

Currently, around 83% of my portfolio is tied up in long-term positions, while 17% remains in cash for occasional trades. Each individual trade typically represents no more than 1% of the entire portfolio, often considerably less.

Some may worry about the time commitment associated with “long-term” investing. Inflation, a challenging job market, and uncertain futures mean many feel behind.

However, resist the urge to jeopardize everything on poorly thought-out bets. If you choose to trade, leverage the expertise available here at Paradigm Press.

We have skilled traders on our team who can enhance your trading experience significantly. Attempting to navigate it solo is difficult and costly. Most don’t succeed on their own.

Still, never overlook the importance of that long-term portion—it’s statistically where most lasting growth happens.

This week’s focus will be on the stocks I currently consider worthy of a long-term commitment.