“What always impresses me is how much better the relaxed, long-term owners of stock do with their portfolios than the traders do.” Lucien Hooper, quoted by Sir John Templeton.

A friend and client emailed me asking what I thought about a particular investment that has been in the news lately.  “What about buying it?” he asked.  “It’s gone up a lot since the last time we discussed it.”  He’s concerned he’ll miss out on the skyrocketing growth.

He and I have talked about this investment before on the phone when he asked, “Do you think it’ll go higher?”

“There’s no logical reason why it’s this high,” I answered.

“Does that mean it can’t go higher?” he asked.

“No.”

“Could I make some money on it?”

“Possibly.”

“But could you just as easily lose money on it?” I asked.

“I guess.”

“Should we gamble on that?”

“Well maybe it’s not a good idea.”

When you read about the great investors like Warren Buffett or Sir John Templeton one thing that strikes you is their quietness and patience in investing.  None are traders.  They thoroughly research.  Buy good quality investments not fads. Then hang on to them for years.  They’ve been phenomenally successful.  Far more successful than the overnight wonders in the info-mercials who only tell you about their victories not their blowups.  And even their successes are suspect.

The temptation is great when you hear about someone who struck it rich with some easy investment.  “You can’t lose,” is the pitch.  “Extraordinary returns with no risk.”  It appeals to all of us.  But it often catches those who want a quick fix.  Or who want to be rich but not pay the price.

How do you keep from getting trapped?

The bible says, “He who works his land will have abundant food, but the one who chases fantasies will have his fill of poverty. A faithful man will be richly blessed, but one eager to get rich will not go unpunished.” (Proverbs 28:19-20, NIV)

Check your attitude and your actions.  Are you desperate to get rich?  Are you chasing fantasies?  Or are you diligently contributing to yourself, your family and others?  Are you “working your land” or are you chasing get rich quick schemes?  God promises that the one who faithfully works and gives back will in the end be blessed.  The one who continues to chase the next “hot” thing will keep blowing up.

Does that mean you’ll be phenomenally wealthy?  Not necessarily.  Does God promise you’ll be blessed as  you follow his ways?  Absolutely.

How do you apply this?

First, be careful. Watch out for schemes.  Like the old saying, “If it seems too good to be true it probably is.”  Warren Buffett has said, “My first rule is don’t lose money.  My second rule is don’t forget my first rule.”  You may get lucky once.  But if you keep betting on these schemes you’ll eventually get burned.

Second, view your investments as long term. Does that mean you tuck them away and forget about them?  No.  But it does mean to calm down.   Buy investments that you want to own for five years not five months.

Third, look at how the investment has done over long periods of time. What is its history over 10 to 20 years not just last year.  Often you’ll find the returns haven’t been great until this latest run.  Which means it’s just catching up and you’ll buy it just in time for it to flat line or crash.

Fourth, ask what the economic reason is for these returns. If you don’t know learn.  Successful investors understand why their investments should increase over the long run.  It helps them not make mistakes and to stay patient .

Fifth, quit trying to get rich quick. Get rich slowly.  Work hard, save, give back, invest diligently.  Make a contribution to your family, your company, your customers and society.  Yeah, I know, not very sexy.  But honestly it works.

God promises that as you’re faithful he will supply all your needs.  It’s not about luck.  It’s about consistent hard work and sacrificing so you can reap the benefits later.

Does it mean you can’t enjoy yourself along the way?  No.  But live within your means so you don’t have to take long shots to make up.  And trust that God will bless you as he’s promised.  He really will.

Getting tempted to plunge into the new “sure investment?”  Think again.  Let me know how it goes.

If this post has helped you please let me know, subscribe and share it with others.  I’d appreciate it. D

This series is based on “16 Rules for Investment Success” by Sir John Templeton the legendary investor and money manager.

Important Disclosures:

Douglas Armey, the LPL Financial adviser associated with this website, practices in Fresno, California and may discuss and/or transact business only with residents of the following states:  California, Idaho and Oregon.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance reference is historical and is no guarantee of future results.

Securities offered through LPL Financial, Member FINRA/SIPC.  Member of Securities Investor Protection Corporation (SIPC).  For an explanatory brochure please visit www.sipc.org.          www.finra.org