This is something I didn’t want to write.
But it’s something I think you need to read.
No, it’s not some tabloid tell-all, or deep series of embarrassing confessions, but it’s worth reading (and writing).
The reason I don’t want to write it is because it concerns a winning stock pick that I made some years back. And, though I always want to do well for our members, I really don’t like blowing my own trumpet (much to the chagrin of our marketing team).
And also because, with any of our recommendations that are still current stock picks, it could always go down – or up – from here, so the story isn’t fully written just yet.
But here’s why I want you to read it, and why I had to write it: because there are some very real investing lessons that I want you to really internalise.
The company in question is Corporate Travel Management Ltd (ASX:CTD).
I first recommended it to members of Motley Fool Share Advisor back in August 2012. Then again in June 2014, and once more in August of 2016.
In the 8-plus years since that first recommendation, CTM shares have delivered a total return of 976.3%, as of this morning. That’s the equivalent of turning $5,000 into more than $53,000.
#Humblebrag? Maybe. But as I said, I don’t like victory laps.
Yes it’s a big winner, and I’m proud of the return we’ve delivered for our members.
I highlight it as an example of the power of buy-to-hold investing. We could have sold out for a gain of 100%, 200% or 400% along the way, but sticking to our guns and letting time do the work has well and truly paid off.
So that’s the general theme.
But there’s something more specific I want to share with you.
See, CTM shares changed hands for just under $20 at the beginning of the year.
By March 19, 2020 – the low point for CTM as the ASX plunged into the fastest bear market in history – shares had cratered to be selling for only $4.57 each.
At that point, the news was bleak.
The doomsayers were full-throated in their pessimistic predictions.
And CTM shares were on the ropes.
It was tempting to give in to the fear and doubt. To listen to the pessimists and permabears. To just give up and sell.
And that would have been catastrophic for your wealth.
After that March 19 nadir, shares started to climb.
They passed through $5, then $10, then $15 and eventually $20.
But – and this is important – not in a straight line.
And, as I said at the top, the ride might not be over, either. We can’t ever know.
Why am I telling you this?
Because, while I was as full-throated as the doom-and-gloomers in March, April and May, I wasn’t telling you to sell, or to run away.
Exactly the opposite.
I was exhorting you to hold on. And to buy.
Man, was I (almost) Robinson Crusoe at the time.
Plenty wanted you to sell.
Plenty more wanted you to ‘wait and see’.
Here’s what I wrote, on 22 April, 2020:
“Lastly, this too shall pass.
Yes, this crisis is unique.
So was the GFC.
So was the dot.com crash.
So was the Asian financial crisis (remember that?).
So was 1987.
But you know what they all had in common?
The crisis passed, and shares regained and surpassed their previous highs.
And you know who made money? Those who held and kept buying shares in quality companies.
Will this time be the same? We can’t know yet.
But I reckon the odds are very, very good.
That’s why I’ve been buying.
That’s why we are recommending our members keep buying.
Oh sure, if you have a working crystal ball, knock yourself out. Go for it.
But if you don’t, shouldn’t you just be keeping your eyes on the horizon and investing anyway?
I think so.”
I sent lots of emails.
I spoke on television.
We held Facebook Live sessions where my overwhelming message was to be optimistic.
More specifically, while the market was down 25%, 30% and 35%, I was saying the same thing I said in that email:
“The ASX has never yet failed to regain and then surpass previous highs. It would be a brave person to bet that this is the first time ever.”
Put simply, fear was running rampant. So-called experts were panicking, or equivocating, or both.
My message was – is – simple.
Look to the horizon, not the ground directly in front of you.
Corporate Travel shares closed yesterday at $20.92 a piece. I’m writing this first thing this morning, so I have no idea what the shares will do today.
But you’ll notice that CTM is now trading at a higher price than on 1 January and more than four times the price the shares changed hands for at the depths of the COVID-19 gloom.
That’s how you win in the stock market.
You find good companies.
You add to them regularly.
You don’t let the misery guts’ of this world scare you out of them.
You let time do the work.
(And, it should be said, I reckon you should reconsider who you listen to, using this year as a benchmark. Do you really want to be following panic merchants and those with weak stomachs? But that’s up to you.)
And that, in sum, is why I felt I needed to write this.
Because, at the time, you could have been excused for thinking “Sure, Phillips… but let’s just see how this Pollyanna optimism works out for you”.
Which is why I’m back here, now.
Bluntly: optimism works.
I want to use the success of our CTM recommendation (and, because it’s more than a one-trick kinda thing, the sum total of the Motley Fool Share Advisor scorecard) to demonstrate.
First: Buy quality businesses at reasonable prices.
Second: Let time do its thing.
Third: Don’t fear volatility.
Fourth: Don’t listen to people who are so busy trying to sound smart that they miss the main game.
And here’s the kicker:
We will have more volatility. We will have more recessions. There will be more doom-and-gloom predictions and the headlines that inevitably follow. More ‘smart’ people will tell you to buy, sell, buy, sell, buy…
And you’re welcome to choose your own path.
But I hope, when that time comes, you’ll remember this story, and not be easily spooked.
I hope you’ll buy quality and – unless there’s something truly business-breaking – hang on.
Even, I hope, keep buying.
Then, let time do its thing.
The future belongs to the optimists.
That’s how real wealth is made.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Motley Fool contributor Scott Phillips owns shares of Corporate Travel Management Limited. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. 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.