The beauty of long-term investing (and the outback)

It's easy to get away from it all when you invest for the long term.

Uluru at sunrise under a majestic sky.

Photo: Scott Phillips

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So, I'm writing this from Yulara, the hotel 'town' about 20 kilometres from Uluru.

I say that not to brag, but to explain my recent dearth of articles (oh, and to tell you that you really, really have to get out here!).

The outback has been unusually cold and wet for this time of year – the latter meaning we had to stick to the blacktop on our drive so far, rather than our intended dirt road itinerary – but it's still been a magical trip. (And it also gives us a reason to come back again… to see the places we missed!)

I've been fortunate enough to have been to Uluru before, but it never fails to impress, in both size and grandeur. The clouds have robbed us of the spectacular colour-changing sunrises and sunsets so far but hopefully, that'll change in the next couple of days.

Fingers crossed, anyway.

We came via Wagga Wagga (just a motel stop, so we'll explore more next time), Renmark, Quorn, and Coober Pedy, and enjoyed all of them. The Hotel Renmark is a very cool old building, and the people were really friendly. Quorn's caravan park is wonderful, and we were lucky enough to be there on the pub's 'schnitzel night' — 21 options, if you don't mind. Put it on your list. And I'd never been to Coober Pedy before. It's a whole different world, and you really have to experience it.

We still have Watarrka / Kings Canyon and the West MacDonnell ranges left on our itinerary. Internet and time permitting, you might hear from me along the way (or not).

But The Motley Fool isn't a travel company, and you're not here for a travelogue. So, I'll move on. But fair warning, what follows is a combination of travel-inspired investing and personal finance thoughts, so you're going to have to bear with me.

In no particular order:

There are plenty of people still out and about, spending money in the economy. Fuel prices were pretty reasonable most of the way (and the higher prices more recently are understandable, given the remoteness and lower volumes). For what it's worth, we added an extra night to our hotel stay here with less than 24 hours' notice, which we didn't expect to be able to do. Maybe a sign of a cooling economy. Maybe just the reality of running a hotel, with one-night 'gaps' a common problem.

Now, that's a single anecdote, without context. But it's something.

I was also really pleased to read that inflation is falling, and meaningfully quickly. It's still way too high for comfort, both for us as consumers and the RBA as the manager of monetary policy. With discretionary retail sales also falling, we may not be at the end of rate hikes, but I dare say we can see it from here.

Last I checked, the bond market and most economists were expecting two, maybe three more increases. As you know, I don't do predictions, but I wouldn't be at all surprised if we see only one, if the data continues in this direction.

And – I'm sorry to say – the odds of a recession are also increasing. Fingers crossed we dodge that bullet.

Moving on, and some time away from the market only reinforces what I've long believed (and said) about the folly of market-watching. Professionals and amateurs alike convince themselves that you have to be obsessively watching the movements of share prices, just in case something happens.

I was like that too when I started investing. But not for long.

I soon learned the value of the sign that used to hang in my high school woodwork classroom, and which I've never forgotten: "Don't be like a rocking horse: Plenty of action, but no progress".

Lots of 'things' tend to 'happen' on the ASX. Companies make announcements. Share prices bounce around. Forecasters prognosticate. Brokers release 'price targets'.

It's all noise.

Okay, maybe not all of it. 

Just 99.99%.

If I'm generous.

It's true that some company announcements are important for a long-term investment thesis.

But really, really rarely.

Few fortunes are made on the basis of reacting quickly to a single company announcement within minutes or even days.

Usually, they're made by understanding the long-term potential of a business (or, spoiler, the ASX as a whole), and regularly buying shares in a diversified portfolio made up of those companies over time.

Before I left home, I didn't sell a single share from my portfolio. I didn't put any 'stop loss' orders in place. I don't have any alerts on my phone or email.

And the reason is very simple. And repetitive!

I own companies whose long-term futures I believe in. And by long-term, I mean five-plus years.

I'm away for three weeks.

There is almost nothing that could happen in that timeframe to change my investment thesis for any of those companies.

Not absolutely nothing, no. But almost.

Plus, if these companies do get better over time, and the ASX gets more valuable over time, I'd be betting against the course of history to stay out of the market.

I'm actively deciding not to give in to temptation.

What temptation? I'm glad you asked.

See, I don't reckon there's much that's more powerful than humanity's desire to believe that we control more than we actually do.

It's collective ego, frankly. And it'll hurt more than it helps.

Because it'll lead us to see patterns when none exist because we just want to believe so badly.

It'll lead us to want to take action because we can't help ourselves.

And – the worst bit: most people reading this won't be able to accept that regular saving, combined with patient inaction is probably the best way for almost every investor to build serious long-term wealth.

They'll read what I said, and either outright reject it, or begrudgingly accept it, but then go back to trying to use an abundance of action instead.

I won't criticise them. It's human nature.

But if successful investing is anything, it's the ability to control and overcome our basic evolutionary instincts.

We're not very good at leaving well enough alone.

Letting time do the work.

(If you're not yet sure I'm right, think of the quality employee and the micromanaging boss, and ask yourself how much value that micromanagement is adding… I can hear the lightbulbs going on from here.)

The last observation?

Nothing new, but a reminder that we shouldn't forget the 'why' of investing.

"He who dies with the most toys still dies", as they say.

Or "Shrouds don't have pockets" if you prefer.

So work hard, save hard, and invest well.

But don't forget to enjoy your life, too. Maybe, for you, that's not travelling Australia.

(I mean… What's wrong with you? Have you seen how beautiful this place is?!?!)

I kid.

A little.

But my point is genuine. You work hard and save hard. For good reasons.

Just don't miss the opportunity to make that reason a reality along the way.

Now, if you'll excuse me, I'm off to try to catch an Uluru sunrise.

Fool on!

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 no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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