Time Horizon vs. Endurance

Another gem from Morgan Housel. The gospel of long term investing remains incomplete without acknowledging the importance of keeping an eye on events in the short run. At Marcellus, whilst we swear by our low churn, buy-and-hold philosophy, we do spend every ounce of our energy analysing any short term developments and trying to decipher the noise from the signal that can either validate or question our long term investment thesis on a continuous basis.

Housel writes, “It’s wrong – dangerous – to assume that because you have a long time horizon you can ignore the short run. If you ignore something, you’re unprepared for it. And when you’re unprepared for it it will eventually take advantage of you. The beauty of a long time horizon is capturing a compounding effect that others who quit before you forgo. But that only works when you’re keenly aware of, and prepared for, and managing for, the kind of short-term stuff that people with shorter time horizons don’t want to deal with.”

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