Meet One Of The Internet’s Best Long-Term Investors and Hear What Keeps Him Sane
“The market rises by about 1/30th of a percent each trading day. The volatility each day is about 1%. So that’s saying each day the noise is thirty times greater than the value. Just think about that.” — @EddyElfenbein
It’s hard to be a long-term investor these days.
The flow of information and speed at which it transmits could distract anyone from their goals. Since 2011, for example, the entire world has been worried about Greece and its possible exit from the Eurozone. Imagine how many people have actually panicked over this and sold positions. The S&P 500 is up about 65% since.
So how do you filter noise? How do you detach yourself from headline fear? Our latest podcast with Eddy Elfenbein explores just that.
“It is true for investing, to do better you have to do less. To not get rattled by the crazy news that comes across: “Stocks go up on more inflation” and “stocks go down on more inflation.” It’s hard to even keep a coherent narrative. That’s how crazy Wall Street can be.”
For 10 years now, Eddy Elfenbein has maintained a buy list at his website and blog Crossing Wall Street. He built it to show how, anecdotally, it can be done by almost anyone. You can hold, and maintain a strong portfolio as long as you have a core understanding of fundamental analysis. One of his favorite ratios, he says, is ROE (return on equity). In our podcast he mentions Colgate-Palmolive ($CL). Perhaps not the most intriguing stock on the market, but we pulled up a chart of its ROE. It all made sense:
Maybe the best stat we heard from our time with Elfenbein is a story he told us about a study at Fidelity. The results almost entirely support his patient investing method and why it can pay to be detached from the news cycle. He explains how Fidelity wanted to find what group of their investors were performing the best. Were they Male? Female? Young? Old? Well, they found that the best performing group were the people who had forgotten that they even had Fidelity accounts! Wow…
“I want to show investors that this can be done.”
Now here’s where this post really gets started. Below we’ve embedded our conversation with Elfenbein. This is another episode to our new podcast series, The Must-Follow Podcast. We encourage everyone to sit back and listen to this insightful talk: