motley fool

Got this in the email today thought it might be good for NWE believer's..


Hey Fools,

Glad you made it to this week's email. It's an important one, because it contains what I truly believe is the only secret to building long-term wealth. No exaggerations, no letdowns.

Ready?

Of all the historical market data and academic studies I've dug through, and all the interviews with great investors I've conducted, the single best trait I've come across determining investing success is the ability to remain in the market for the long haul, keeping calm while others lose their heads. It's not trying to outsmart the market. It's not getting out before it crashes. The secret to building long-term wealth is endurance, longevity, and the amount of time you can stay invested for.

That's it.

If you can remain tenaciously invested for the long haul, holding through the market's ups and downs, the odds are overwhelming that you will not only do well, but outperform the majority of professional investors.

Easier said than done though, right?

Right. It's tempting to let a bear market get the best of your emotions.

So let's talk some psychology.

Have you ever visualized yourself making money? A lot of investors do. They visualize themselves growing their wealth by a certain amount, or scoring a certain return on their investments. If they have $10,000 invested, they visualize $20,000, imagining how rich that much money would make them feel.

But it almost never works. It actually backfires.

Hitting financial goals is almost never as exciting as you think it will be. What you expected would be an amazing, emotional experience turns out pretty dull when it arrives. This is why rich people aren't nearly as happy as you'd think, and why anticipating a vacation can be more enjoyable than actually going on vacation.

There's an important takeaway from this: Visualizing an outcome makes it seem real, which strips out surprise and emotion when it's actually experienced.

I have a trick that has helped me become a better investor, and kept me invested through the market's ups and downs.

Rather than visualizing gains, I imagine myself losing money.

Try this. Take however much money you have invested in the stock market right now. Divide it by two. Write that number down. If you have $10,000 invested, write down "$5,000." Look at it, long and hard. Think about how it'd feel if your portfolio declined to that amount.

If you're a long-term investor, the odds are good that sometime in the next few decades you will see that number when logging into your brokerage account. The cost of admission for stocks' long-term performance is dealing with an occasional (but temporary) market crash that causes your portfolio to plunge.

Focusing on that low number sets you up for the same dull, unemotional feeling people experience after visualizing gains. Losing a lot of money isn't that emotional when you've been thinking about it for so long. If you can visualize our current bull market changing into a bear market, and what that might do to your portfolio, you're more likely to react less emotionally when it actually occurs. You're more likely to gain the level-headed calmness great investors have. That calmness is what will keep you invested for the long run. And being invested for the long run is the secret to long-term wealth.

I can't stress how important this is. The Motley Fool launched Million Dollar Portfolio in October 2007, almost to the day the market peaked. The portfolio quickly fell in value, tumbling with the rest of the market through the 2008 crash. But rather than panicking, or cashing out, or waiting on the sidelines for the storm to clear, the team did what it knows best: stayed calm and invested for the long haul. Today, Million Dollar Portfolio has outperformed the market by seven percentage points since inception.

To see what portfolio manager Ron Gross and his team are up to before they soon start accepting new members, click here.

"Come what may," Virgil said, "all bad fortune is conquered by endurance." Wise words every long-term investor should remember.

Until next week,