If you’ve been following me on social media, you’ll have noticed my feed take on a decidedly different flavour over the past few days.
See, it’s the middle of the year â school holidays â and we’re off on another family outback road trip.
This one is slightly more ambitious than even some of the more adventurous recent ones: on a whim a few months back, my wife said “We’ve always wanted to go to Broome⦠why don’t we just do it this year?”.
Now, I don’t need much of a push to plan a new adventure, so I was pretty quickly into organisation mode. And I’ve long wanted to drive the famed Gibb River Road (the rutted, car-shaking route from Kununurra in North-Eastern WA to Broome, on the coast). So⦠after double-checking she was serious, I threw myself into it.
We could have flown, and rented a 4WD. But then we’d also have to organise all of the camping gear, food and everything else. And the cost of the hire and flights was eye-wateringly high. Plus, we already have a perfectly good Hilux, set up for that very thing.Â
Soâ¦
So, I decided to drive.Â
The catch? School holidays are only three weeks long, and there was only so much time I could get off work.
The solution? I’d drive, over a few long days, to Alice Springs. My wife and 11yo would fly in, and I’d pick them up from the airport. Then, they’d fly home from Broome, and I’d drive back. (I’m going to drive back via our Queensland office, combining a little work and pleasure).
As I said, it’s⦠ambitious.
2,700km from home to Alice Springs, from where I’m writing this.
Another 1,700km to Kununurra.
A slow 1,100km to Broome.
Then, the family will fly home and I’ll do the 4,700km drive to the Gold Coast, then the ‘short’ 1,000km trip home.
That’s all of the Australian mainland states and one of the two mainland territories (I’m kicking myself for not setting a wheel in the ACT on the way throughâ¦).
Luckily, I like driving. And I have no doubt it’ll be well and truly worth it!
(I could have made the family drive the whole thing, but with more than a few 8-10 hour driving days back to back, this option is slightly⦠wiser.)
Why am I telling you all this? Well, a few reasons.
First, to explain my slightly less frequent missives in this space over the next 21 days or so.
Second, to tell you â again â that you really, really need to get out and see more of Australia.
And third, speaking of being a broken record, to let you know what I’ve done to prepare my portfolio for three weeks largely off-grid.
Nothing.
Literally nothing.
I haven’t sold everything.
I haven’t moved all of my money into an index ETF.
I haven’t entered a series of stop-loss orders.Â
I haven’t done a thing.
Why? Well, because I’m a long term investor.
I have bought (and recommended â more on that later) companies that I expect will be long term winners.
There is not much that could be done, or announced, in the next three weeks that would meaningfully change my mind on any of them.
And â this is the kicker â even if there is (and it’s possible), there’s no opportunity for you or me to front-run whatever share price response will follow such an announcement.
If Woolworths Group Ltd (ASX: WOW) was to announce it was going to exit supermarkets and launch a new cryptocurrency â FreshCoin â the market response would be not just significant, but also swift.
The news would result in an all-but instant fall in the company’s share price. There would be no opportunity to sell the shares before the market had ‘priced in’ the new news.
There’s no magic time of suspended animation where you or I can sell at the old price before the rest of the market finds out.
The same would be true of some good news, sending a company’s share price soaring.
Yes, the market is wrong from time to time, but almost always in its assessment of long term prospects. It’s pretty bloody quick at reacting to new announcements.
So, if I was there⦠it couldn’t do anything about those short-term moves.
Does that sound negligent? Surprising? Like I’m not some omnipotent master of the investing universe?
Perhaps. But that’s good.
The finance industry too often sells itself as the answer to any problem â some all-powerful desk jockeys that can magically deliver your financial dreams from glass offices in the nation’s CBDs.
Which is⦠a lovely idea.
It’s just not true.
Indeed, remember that most managed funds actually fail to beat the market, after fees.
Oh, our marketers could probably sell more memberships if we pretended that we were the answer to all of your problems. ‘Certainty’ sells. So does allowing you to think we have some magical ability to make money, no matter the circumstances.
It wouldn’t be true, of course. But that doesn’t stop others who offer certainty and confirmation bias and the ‘comfort’ that comes from sharp suits and high fees (that must mean they know what they’re doing, right?).
So no, we don’t tell you what you want to hear, in an attempt to separate you from extortionately high fees (and, too often, sub-par performance).
We do it the other way around: telling you what we believe and how we work, and inviting you to join us if that feels right for you.
It’s our â my â firm belief that being long-term investors, focussed firmly on the multi-year prospects of the businesses we own and recommend, is the best way to earn long-term outperformance.
Why?
Well, because compounding works, but you need to give it time to do its thing.
And that a focus on the long term is, well, not very common, giving us an opportunity to fish where others aren’t.
You have the day-traders and chart-readers. Good luck to them, but we don’t think that’s likely to earn us market-beating returns.
Then you have the fund managers, measured on quarterly returns, trying desperately to keep their jobs⦠and their clients’ funds. That’s a brutal and devilishly difficult job.
And then, you have the long term. Where a focus on the business possibilities of Woolies, CSL Ltd (ASX: CSL), Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) have generated huge long term returns for patient shareholders.
(As has the ASX as a whole, by the way!)
I won’t lie â I’m very glad that’s true. If I had to make my living (and grow my portfolio) by being glued to a computer screen, I’d find that far more stressful, less fulfilling⦠and my holidays would be shorter!
But also, it just is.Â
The likes of Warren Buffett, and plenty more besides, are the evidence of the success of long-term investing. But also, as I said above, the ASX itself is, too. As I’ve mentioned a gazillion times before, according to Vanguard, a hypothetical $10,000 invested on the ASX in July of 1993 was worth $130,000 on June 30 last year.
I have always been â and remain â puzzled that, in the face of that stupendous opportunity, people try to be Aesop’s hare, rather than his tortoise.
Is it disbelief? Impatience? Ego? I have no idea.
I just know that, whatever my other failings, my analytical skills and temperament have led me to a view that, given the option of swimming with the tide, or against it, the choice is easy.
So, that’s what I do. And why I’m not even slightly concerned about what could happen in my absence.
A small point here, though: I mentioned above that I’d come back to ‘recommendations’. While I’m confident that there’s hardly anything that could require my immediate attention while I’m away, there’s no guarantee.
And while that doesn’t worry me, when it comes to my personal portfolio, it’s important that our members know I’m not leaving the shop unattended.
We have a wonderful team of investors at The Motley Fool, who will continue to read, research and analyse all of the goings-on at the companies we recommend â and those we might recommend next.Â
And if anything did happen that might benefit from a near-term response, rest assured that they’ll let me know⦠and that if they can’t get hold of me, they’re fully empowered to make whatever decision they believe is in the best interest of our members.
Yes, the best of both worlds.Â
The other benefit of a holiday? From experience, it gives my brain some downtime. To consciously reflect and to subconsciously do whatever our brains do when we’re just living in the moment.
I’m an investor in part because I’m fascinated by, and curious about business. (Over my morning coffee, I was absentmindedly considering the business model and presumed financial metrics of the motel I stayed at last night!). So it’s never far from my mind. But some time away is a good thing.
And now, if you’ll excuse me, I’ve got a bit more work to do (I arrived in Alice a day earlier than I expected), before rolling out the swag.
As to what sort of sleep I’ll get, I’m not sure⦠turns out I’ve arrived on Territory Day â the one day of the year fireworks are legal in the Territory.
It could be a long nightâ¦Â
Fool on!
The post The secret to a worry-free holiday appeared first on The Motley Fool Australia.
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Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
