The Long Game: Why Staying Put Is the Hardest (and Smartest) Move In Investing

It’s funny how, in the world of investing, doing nothing is often the most productive thing you can do. We’ve all been there, sitting in front of the screen, watching the red numbers tick down, feeling that itch in our fingers to "do something" to save our hard-earned capital. But if my three decades in the markets have taught me anything, it’s that the market is a master at shaking people out right before the real gains happen.

When I look at the long-term charts of the S&P 500 or the total real market returns going back to the 1900s, the message is loud and clear: time is the ultimate filter. It filters out the noise, the politics, and the short-term panics. For a value investor, the goal isn't just to find an undervalued gem; it’s to have the stomach to hold it when everyone else is running for the exits.

<Image Credit : redw Advisrors & CPAS >

The Erosion of Cash and the Power of Real Assets

If you look at the historical performance of different asset classes over the last 200 years, there is a staggering contrast between holding "paper" and holding "productive assets." A dollar from 1801 is worth almost nothing today in terms of purchasing power. In fact, the US Dollar has an annualised return of roughly -1.4%. That is the "silent tax" of inflation eating away at your wealth every single year.

Gold does a bit better, acting as a decent store of value with a 0.6% real return, but it doesn't grow. It just sits there. It doesn’t innovate, it doesn’t pay dividends, and it doesn’t compound.

On the flip side, look at stocks. Even with world wars, depressions, and various financial crises, the annualised return sits around 6.9%. If you had $1 in 1801 and it grew at that rate, it would be worth millions today. This isn't just a math trick; it represents the collective human ingenuity of companies constantly finding ways to be more efficient and profitable. As a value investor, I don’t view a stock as a ticker symbol moving on a screen. I view it as a partial ownership of a business that is fighting to grow its value in a world that is constantly trying to devalue cash.

There Is Always a Reason to Sell (But You Shouldn't)

One of the charts I often share shows the S&P 500’s climb from 1985 to today, peppered with "reasons to sell." It’s almost comical when you see it laid out like that. Black Monday in 1987, the Gulf War, the Asian Financial Crisis in '97, the Dot-com burst, 9/11, the Global Financial Crisis, Brexit, COVID-19, and most recently, the inflation scares, Trump Tariff War and geopolitical tensions.

At every single one of those red dots, there was a professional analyst on TV telling you that "this time is different" and that "the world is ending." If you had listened to them in 2008 during the Lehman collapse, you would have missed the decade-long bull run that followed. If you had sold during the 2020 lockdown, you would have sat on the sidelines during one of the fastest recoveries in history.

The market has a 100% track record of recovering from every single crisis it has ever faced. The "reason to sell" is usually just a temporary headline, whereas the "reason to hold" is the fundamental truth that good businesses eventually reflect their intrinsic value.

<Image Credit: Koyin.com>

The Asymmetry of Bulls and Bears

We often spend way too much time worrying about bear markets. Yes, they feel terrible. The average bear market sees a drop of about 31% and lasts roughly a year. It’s painful, it’s bloody, and it makes you question your strategy.

But look at the other side of the ledger. The average bull market lasts over 5 years and returns around 254%. When you compare the two, you realise that the "cost of admission" for those massive gains is enduring the short-lived pain of a crash. If you try to time it, jumping out to avoid the 31%, you almost always end up missing the start of the 254% surge.

I’ve learned that the most expensive words in investing are "I'll wait for things to settle down." Things never settle down. There is always a war, an election, or an economic report that looks scary. The market is a "discounting mechanism"; by the time things feel safe, the prices are already high.

<Image Credit : First Trust Advisors LP >

Wall Street’s Game vs. Your Game

There’s a great visual that shows the probability of a positive return based on your holding period. If you trade on a daily basis, your odds of making money are basically 50/50. You might as well go to the casino. Wall Street banks and high-frequency traders have to play in that short-term sandbox because they are chasing quarterly bonuses and "Alpha" over 90-day cycles.

But as a private / value investor, you get to hang out in a completely different zone. Once you extend your holding period to 10 years, the probability of a positive return jumps to 88%. At 20 years, it’s 100%.

This is the "unfair advantage" of the individual investor. You don't have a boss breathing down your neck, asking why your portfolio is down 5% this month. You don't have clients pulling funds because of a temporary dip. You have the luxury of patience. As Charlie Munger used to say, the big money is not in the buying and the selling, but in the waiting.

<Image Credit : Robert Shiller>

Politics and the Market: A Distraction

I often get asked how the political climate affects my portfolio. Does it matter if a Democrat or a Republican is in the White House? Does it matter who is leading in our local context?

The "Growth of $1" chart through various US presidencies—from FDR to Biden—is the best answer to that. Red or blue, the line goes fro4m the bottom left to the top right. Some administrations are better for certain sectors than others, but the overall engine of capitalism is much larger than any single politician.

When you focus too much on the news, you lose sight of the compounding engine. Value investing is about the business, the cash flow, and the dividend yield. Whether the "AI Bubble" is the talk of the town or "Trump's Tariffs" are hitting the headlines, a company like OCBC, SHELL, China Mobile, or a solid SGX REIT is still going to collect its revenue and distribute its earnings.

The Market Pendulum: Navigating the Swing of Investor Psychology

In my three decades of navigating the markets, if there is one constant I’ve learned to rely on, it’s the "Market Pendulum." Most investors treat the stock market like a straight line or a predictable machine, but it’s actually more like a heavy pendulum swinging between two extremes: unsustainable euphoria and irrational despair.

When the pendulum swings toward Greed and Euphoria, prices detach from reality. Everyone is "panic buying" because they fear missing out. This is the "Boom" phase where everything looks overpriced, yet the narrative suggests it will go up forever. Conversely, when the swing moves toward Fear and Depression, we see the "Bust." This is where high-quality companies become drastically underpriced simply because the collective psychology has shifted toward survival at any cost.

As a value investor, the core principle to internalize is Regression to the Mean. Just as a pendulum cannot stay suspended at its highest point, market valuations eventually pull back toward their long-term averages. High returns usually lead to lower future returns, and deep crashes often set the stage for spectacular recoveries.

The hardest part for any investor is accepting that the market is a game of probability, not certainty. We don't have a crystal ball to know exactly when the pendulum will reverse. We only know that the further it swings in one direction, the more certain it is to eventually swing back. Our job isn't to time the exact peak or trough, that's a fool's errand. Instead, our job is to stay disciplined, recognize when the pendulum is in an extreme zone, and position ourselves to benefit when the inevitable reversion occurs.

Understanding this cycle turns volatility from a threat into an opportunity. When you realise the "Bust" is a mathematical precursor to the next "Boom," you stop reacting with your heart and start investing with your head.

Final Thought

Being a value investor in a world obsessed with "get rich quick" is a lonely road. You will often look like a fool in the short term. You’ll be holding "boring" stocks while your friends are bragging about their latest crypto or speculative AI/tech play.

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But the data doesn’t lie. Over the long haul, the market rewards those who can distinguish between price and value. It rewards those who understand that volatility isn't "risk", it's just the price we pay for long-term returns.

Risk is not the market going down 20% in a year. Risk is holding cash for 30 years and realising you can no longer afford the life you planned because inflation ate your lunch. Stay invested, focus on the fundamentals, and let time do the heavy lifting for you. It’s not about timing the market; it’s about time in the market.

Till next update, Cheers!

STE