Last week was a momentous one, with Liz Truss winning the battle to be the next prime minister, and the death of Her Majesty Queen Elizabeth II.
I couldn’t help but think of how the latter’s long reign and consistent principles contrasted with the relatively fleeting tenures and successes of the 15 prime ministers who served under her — often characterised by transient policies, U-turns and a personal imperative to win general elections and keep hold of the PM position.
I thought I might draw an analogy to long-term investing and short-term trading. However, I think I’ve perhaps got a better take-off point to approach the subject for us commoners.
An early retirement
By the time you’re reading this, I’ll be on a week’s holiday in Switzerland, staying with my brother. It’ll be my last visit, because he’s at the end of his final year’s work and will return to the UK permanently to enjoy an early retirement.
He’s saved and invested through his life. He’s made some sacrifices, including working the last decade in Switzerland, with only a few days a month in the UK with his family and a few weeks a year on holiday with them. But it’s helped him to retire early.
I’m pretty sure he’s never checked stock and bond prices daily, or house prices, or the prices of other assets. He’s just taken a long-term view, worked hard and steadily built his wealth. For me, looking at share prices every day is a necessary part of my work, but my strategic focus is nonetheless on the long term.
The Glacier Express
In the context of our shared long-term views, it struck me that the one outing we have firmly booked during my stay in Switzerland is entirely appropriate.
We’ll be taking the Glacier Express from Chur to Zermatt. In terms of speed, the ‘glacier’ part of the name is more fitting than ‘express’. It’s known as the slowest express train in the world. Travelling at an average speed of 24mph, the journey will take us over six hours.
Starting at Chur (1,919 ft above sea level), we’ll climb to the Oberland Pass (6,670 ft), and descend into the Upper Rhone valley, before climbing again to Zermatt (5,310 ft). A short cogwheel train to Gornergrat will take us up to 10,135 ft, with the view ahead being the peak of the mighty Matterhorn at 14,690 ft.
Now, I reckon if you were to plot all the altitudes of the journey on a chart, it would bear more than a passing resemblance to the long-term chart of a stock market index, like the FTSE 100, or the share price charts of many individual companies. That’s to say, numerous peaks and troughs along the way, but ultimately a long-term trend of reaching higher and higher altitudes.
There are investors who regularly hop off the metaphorical train in the uncertain hope of picking up a cheaper or faster one. But I’m convinced that for most people, following a long-term, ‘get rich slow’ strategy — owning shares and continuing to buy more through the market’s many ups and downs — is a surer way to reach a desired financial destination.
At the risk of overstretching the analogy, let me give you a few final thoughts on the journey I’m expecting.
Dozens of bridges and tunnels are a feature of the route. I’ll be reminded that, in a lifetime of investing, there’ll be many occasions when the potential downside looks terrifying or when the immediate outlook is entirely in darkness.
But I’ll also be reminded that in the history of the stock market, times of fear and uncertainty have always passed. And that, over the long term, the market has invariably gone on to reach new highs.
Enjoy life along the way
My brother tells me we won’t be travelling in the most expensive class. It’ll be very comfortable, rather than extravagant. A three-course meal with a modestly priced bottle of wine, rather than seven courses with champagne and all. And a cheap ticket on a standard service for the return journey to Zürich.
I’ll be reminded that with a little care you can enjoy life, while continuing to invest and build your wealth. Like my brother, you may even be able to retire early, if that’s your goal.
I’ll doubtless raise a glass on the journey and toast the Glacier Express, long-term investing, and his early retirement.
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