Phil Fisher's response when asked about the single most important lesson from his investing career:
It is just appalling the nerve strain people put themselves under trying to buy something today and sell it tomorrow. It's a small-win proposition. If you are a truly long-range investor, of which I am practically a vanishing breed, the profits are so tremendously greater. One of my early clients made a remark that, while it is factually correct, is completely unrealistic when he said, "Nobody ever went broke taking a profit.'
Well, it is true that you don't go broke taking a profit, but that assumes you will make a profit on everything you do. It doesn't allow for the mistakes you're bound to make in the investment business.
Funny thing is, I know plenty of guys who consider themselves to be long-term investors but who are still perfectly happy to trade in and out and back into their favorite stocks.
Some years ago I was the adviser to a profit-sharing trust for a large commodities dealer. I bought for them--I think the stock has been split 15 times since then--a block of Texas Instruments at $14 a share. When the stock got up to $28, the pressure got so strong ("Well, why don't we sell half of it, so as to get our bait back?') I had all I could do to hold them until it got to $35. Then the same argument: "Phil, sell some of it; we can buy it back when it gets down again.'
That is a totally ridiculous argument. Either this is a better investment than another one or a worse one. Getting your bait back is just a question of psychological comfort. It doesn't have anything to do with whether it is the right move or not.
But, at any rate, we did that. The stock subsequently went above $250 within two or three years. Then it had a wide open break and fell to the mid-50s. But it didn't go down to $35.
