Why you shouldn’t worry about the short-term

It’s impossible to know what’s going to happen with the share market in the short-term. Any share could drop 1% or 2% in a day simply because there aren’t many buyers on that day and perhaps a large seller wanted to sell.

President Trump could unleash another tirade of strange tweets or perhaps a new tariff to send the share market down by 5% or more.

However, you just need to think what the Australian market has been through to arrive at its current value. Several wars, 9/11, the GFC, Greece economic worries, the Zika virus, Ebola have all come and gone.

Our shares do not ‘know’ that we own them. The share market doesn’t care what stocks we hold. A share won’t go up simply because you bought it, as much as you’d like it to.

When you buy a share, you should do so with the idea that the business will be in a financially stronger position in a few years time. Therefore the market will hopefully value it higher in that time. This is the best chance of creating solid long-term returns.

For example, WAM Global Limited (ASX: WGB) listed onto the ASX on 22 June 2018 with a net tangible asset (NTA) per share of $2.20. It just reported that after its first week the post-tax NTA had fallen by $0.01 to $2.19 at 30 June 2018. It would be extremely short-sighted to think you should sell it after it posted a slight decline in its first week.

Foolish takeaway

Watching the pot boil doesn’t make it boil quicker – this is only talking about a few minutes. Watching paint dry is very boring – yet this only takes hours. You need to give your shares years to create strong returns. It’s hard to be patient, but giving your shares time in the market is the best way to compound to wealth.

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Motley Fool contributor Tristan Harrison owns shares of WAMGLOBAL FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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