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Our company is getting ready to release some new technology that is the core of our entire product offering. Essentially, we are coming out with 1 chip that can do what 3 chips can do currently. To the bottom line, we anticipate that it will be able to save 1 million dollars per year.
It was not easy to get to this day. We started this effort back in 2002 and the initial release date was in 2003 (Sounds like Microsoft Vista anyone?). After multiple delays and switching vendors, my boss did what many would not do. In the end of 2006, he authorized a second parallel effort to develop this technology. Since we are outsourcing part of the development work to our vendor, this means a huge investment. To cut the long story short, he spent an additional $500,000 dollars on the second effort, which in the end turned out to be the solution that we are releasing today. If my boss did not make this move, chances are we would still not have a solution today.
What my boss did was very bold, and it fits the general investing advice perfectly. If your investment outlook is long term, invest in stocks even though it is more volatile. His $500,000 investment is just like investing in the market now. Even though you might lose money in the short term, the long term outlook is brighter than money kept in bonds for long periods of time. The key he told me is to know what’s important to the long term outlook. He knows that this technology is a key for long term sustained growth, which made his decision to suffer the short term pain (the huge investment) easy.
We as individual investors are scared right now. We are so used to the bull market that we forgot how to react when things are uncertain. I remember that last year around May, we were in a similar market. People were really scared about the possible increase in interest rates, slow down in economic growth, high gas prices etc. If you were one of those people that just kept putting money into the market a year ago, you would have been pretty happy today.
I am not saying that we would not go into a bear market. However, if your outlook is long term, then keep your focus on your long term goal. Keep investing because long term stock performance is hard to beat.
Maybe I should ask my boss to be my financial advisor since he has fundamentally sound principles.
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Insight post and great analogy. I’m definitely in the game for the long term, and I was rewarded today with a good day in the stock market.
Thank you for the post, I enjoyed it.
How do you come up with these entries!!!
Anyway, I noticed you just posted your feed count. “100 reader” is no easy feat. Congratulations!
Fabulous advice.
I agree completely. You just got to trust that the long term outlook for stocks is way better.
We just have to let our emotions get out of the way and keep investing since we are in it for the long term.
Investing for the long term is a good idea. And that is what Warren Buffett does. If you follow his story, he hardly ever sells his stock holdings because he is an “investor” and not a “speculator”.
Hock: I think many people refer to Warren Buffett when they talk about long term investing. Hopefully, people realize that he really analyzes the companies and only buys the ones that he considers good value. Many of us just blindly buy something (stock, mutual fund, ETF etc) and just hold onto it believing that it is long term investing.
Hi David,
Maybe it’s because I read your about page first and read that you were born i 1980… but for whatever reason, I can’t help feeling that the words on this site are from a wide-eyed, young, and naive person with big dreams. When I read this blog posting, I immediately thought to myself, “of course; hindsite is 20/20.”
On your about page, you type ‘colleague’ a few times, but it should actually be ‘college’ (or university if you prefer); ‘Colleague’ isn’t the right word.
I do commend your big dreams though. And I hope you do reach some sort of goal. I live in southern california too, and you’re right about how expensive housing and gas is down here.
I have a bias that money-centric people are often selfish and are generally jerks (rude to restaurant waiters and waitresses etc..). They often don’t leave enough tip either. I’m not a waiter; just a programmer. While money is important, you might also find happiness just being a good person.
JoeCustomer: Thanks for the correction on my about page!
Criticism is something that cannot be bought and they offer me a true insight of how someone can feel from the articles that I write.
I believe I do have big dreams, and thank you for your blessing on it.
I am probably considered a money-centric person, and I cannot comment on whether I’m selifsh or a jerk because I don’t believe in defending myself. In the end, I am what I am and I need others to judge whether or not I’m a good person or not. Hopefully through my writing, eventually my readers will start to know me and can judge me then. If I do indeed project a selfish image now, hopefully as I age, my readers can see my growth since I will be sharing my growth right here on this blog.
I cannot say I am naive or not since I won’t know unless I look back at myself a few years from now. The facts are that I’m only 27, and I believe it’s very easy to stick the word “naive” or “childish” on someone who is young. Maybe if we can discuss which parts of my articles give you that feeling, it will be appreciated since the experience will definitely help me grow.
I look forward to hearing from you and hopefully you will check this article again so we can further discuss.
Concerning naievete, those of us who have lived through bear markets think anyone is naive until they lose money in a bear market. Were you seriously invested in the stock market from 2000-early 2003? If you dutifully bought into the crash then you’ve earned the right to exhort us about long-term investing. If not, then you sound like a mutual fund spokesperson. I don’t like war analogies applied to the market, but it really is like combat–no one really knows how they’ll hold up in extreme danger until they’re caught in it.
Houyhnhnm: I’m not sure why but you sound quite hostile with your statements. Your comments (and everyone else’s are welcome though). Yes I have in fact been investing between 2000 to 2003 but I don’t see how that changes anything I have written in the article. Whether I (or anyone else) will hold up and keep buying when the market is tanking has nothing to do with the fact that stocks in the long term outperform bonds and cash which I tried to illustrate here. I apologize for not being able to get the message through.
I was commenting on the discussion about naivete, not disagreeing with your article. If you kept to your program through 2000-2003 then you aren’t naive in my book, and have proven that you practice what you preach. I apologize for the hostile tone–I was just trying to be honest.
Houyhnhnm: Thanks for clarifying and I appreciate your honest comments since that’s the only way that I will know how people really feel about my article allowing me to grow.