5 Tactics That Help Patient Investors Prosper

Behavior determines investment success or failure -- not knowledge or skill or luck.

If you ever needed a lesson in the power of patience, let me remind you of a date in recent history: March 9, 2009. On that day, the Dow Jones industrial average closed at a gut-wrenching low of 6547. Stock prices had been cut in half in just 15 months. General Electric (symbol GE) had plunged from $38 to $7, Cisco Systems (CSCO) from $29 to $14, and Bank of America (BAC) from $43 to $4.

Making money in the stock market is hard not because finding great companies is difficult but because the best and easiest-to-understand strategy for winning is so difficult to adhere to. That strategy can be described in three words: buy and hold. Five years from that 2009 bottom, the Dow was up roughly 10,000 points to a new record. No, the stock market doesn’t always bounce back so dramatically, but it always bounces back.

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James K. Glassman
Contributing Columnist, Kiplinger's Personal Finance
James K. Glassman is a visiting fellow at the American Enterprise Institute. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence.