FIVE LESSONS ON LONG-TERM INVESTING

1. Inflation. To preserve wealth, you must grow your capital greater than the rate of inflation.
2. How do you do that? You own stocks. If the businesses you own grow faster than the rate of inflation, your money grows.
3. Why does this work? The U.S. economy historically grows faster than inflation and corporate profits grow faster than the economy, fueling stock returns.
4. Even though it works, sometimes it can try our patience. Despite market downturns, history shows markets recover and go on to reach new highs.
5. Stay the course. There will be times we’re going to be out of sync with the market. Right now, there is a lot of speculation in the market, you can even call it gambling. We’re not going to participate in that just because something is going up and sounds exciting. We’re going to stick to our criteria – only investing in companies that meet our rigorous quality standards.