Image source: Getty Images
Last week was pivotal, with Liz Truss winning the battle to become the next Prime Minister and the death of Her Majesty Queen Elizabeth II.
I wonder how the latter’s long reigns and succession of principles compare with the relatively short tenures and achievements of the 15 prime ministers who served under her – often ad hoc policies, cycles and the choice of personal importance to defeat a general and retain the prime ministership.
I thought I could draw an example of long term investing and short term trading. However, I think I’ve probably found a better starting point to approach the issue for us common people.
Early retirement
By the time you read this, I will be with my brother on a week’s holiday in Switzerland. It will be my last visit, as he is at the end of his final year of work and will be returning permanently to the UK to enjoy early retirement.
He saved and invested in his life. He has made some sacrifices, including working the last decade in Switzerland. But it helped him retire early.
I’m pretty sure I don’t check stock and bond prices every day, or house prices, or the value of other assets. He took a long-term view, worked hard and steadily built his wealth. For me, watching stock prices every day is an important part of my job, but my strategic focus is on the long term.
Glacier Express
From our long-term perspective, I was struck by the fact that my stay in Switzerland was totally worth the trip we had strictly booked.
We take the Glacier Express from Chur to Zermatt. In terms of speed, the ‘ice’ part of the name is more fitting than the ‘express’. It is known as the slowest express train in the world. Traveling at an average of 24mph, the trip will take us over six hours.
Starting at Chur (1,919 feet above sea level), we climb to the Oberland Pass (6,670 feet) and descend into the Upper Rhône Valley, before climbing again to Zermatt (5,310 feet). A short cogwheel train to Gornergrat takes us up to 10,135 feet, where the view ahead is the peak of the mighty Matterhorn at 14,690 feet.
Similarity
Now, if you were to plot all the highs of the trip on a chart, I think it would look more like a stock market index than a long-term chart. FTSE 100, or stock price charts of many private companies. That means, lots of climbs and potholes along the way, but eventually a long and steep climb.
There are investors who regularly jump off the proverbial train in the uncertain hope of picking something cheaper or faster. But I’m sure that for most people, following a long-term ‘get rich slow’ strategy – owning stocks and continuing to buy as the market moves up and down – is a sure way to get to your desired financial destination.
Final thoughts
At the risk of overstretching the analogy, let me give you a few final thoughts about the trip I’m looking forward to.
Dozens of bridges and tunnels are a feature of the route. I remember that, in a lifetime of investing, there will be many occasions when the potential downside seems daunting or the immediate outlook is completely in the dark.
But I always remember that there have been periods of fear and doubt throughout the history of the stock market. And that, in the long run, the market always reaches new highs.
Enjoy life on the road
My brother tells me that we don’t travel in the most expensive class. It will be more comfortable than excessive. A three course meal instead of seven courses with champagne and all with a moderately priced bottle of wine. And a cheap return ticket to Zurich on a regular service.
I remember that with a little care, you can enjoy life by investing and building your wealth. Like my brother, you might be able to retire early if that’s your goal.
I’ll raise a glass to the trip and no doubt toast the Glacier Express, a long-term investment and an early retirement.