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Stick with the strategy for the long term from "summary" of The Little Book That Beats the Market by Joel Greenblatt
The concept of sticking with the strategy for the long term is crucial in investing. It is easy to get caught up in short-term market fluctuations and become swayed by emotions. However, successful investing requires discipline and patience. By staying committed to a proven strategy over the long term, investors can increase their chances of achieving above-average returns. One of the key reasons to stick with the strategy for the long term is to allow for the power of compounding to work its magic. Compounding refers to the ability of an investment to generate earnings, which are then reinvested to generate more earnings. Over time, compounding can significantly boost returns. By staying invested in a strategy for the long term, investors give their investments the time needed to benefit from compounding. Another reason to stick with the strategy for the long term is to avoid the pitfalls of market timing. Market timing involves trying to predict the direction of the market and make investment decisions based on those predictions. However, research has shown that market timing is incredibly difficult to do successfully. By sticking with a long-term strategy, investors can avoid the stress and potential losses associated with trying to time the market. Additionally, sticking with the strategy for the long term helps investors avoid making emotional decisions. Emotions such as fear and greed can lead investors to make irrational choices that may harm their investment returns. By following a disciplined, long-term strategy, investors can reduce the impact of emotions on their decision-making process.- Sticking with the strategy for the long term is a fundamental principle of successful investing. By remaining committed to a proven strategy, allowing for the power of compounding to take effect, avoiding the pitfalls of market timing, and mitigating the influence of emotions, investors can increase their chances of achieving their financial goals.
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