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Friends, Last month, I announced my "Top Stock for September" to anyone who registered for a special webinar (hint: I'm doing the same thing for October at noon Easter today. Register for free here). The stock was Meta Platforms. Since then, a lot has happened. Most notably, the company released its personal AI assistant, Muse. And it has become the most downloaded app in both Apple and Google's app stores for the month. The stock has also done quite well. Does that mean I made a great pick? Absolutely not. As Benjamin Graham once said: "In the short run, the market is a voting machine, but in the long run, it is a weighing machine." Right now, my gains are simply because shareholders are voting that they like Meta's move. But it won't be until actual revenues and profits show up that the weighing machine takes over. Then, and only then, could I perhaps declare victory. The stock market's feedback loopThe most crazy-making aspect of long-term investing is the feedback loop. Consider a basketball player: she gets instant feedback on her performance. If the shot goes in, she keeps doing what she's doing. If it repeatedly doesn't, it might be time to change something up. But because the market slowly moves from voting (driven by hype) to weighing (driven by results) machine, it can take a long time to get any feedback that's more than just noise. Back in late July 2023, I called CrowdStrike one of the five cheapest stocks I followed. Here's how it did over the next month. That looks terrible -- losing to the market by 10 percentage points in just one month. But in the three years since then, annual recurring revenue has more than doubled! The stock has followed suit If you squint your eyes, you can see that little blip where CrowdStrike underperformed on the left. That's the power of taking the long term mindset. The beauty of this approach is that it not only helps you achieve stronger returns, but also makes the process of investing a more calm, less white-knuckling experience. Over the long-run, that's just as important. Wishing you investing success, |
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