Broker Check

Owning Stocks vs. Owning Successful Businesses

June 01, 2024

A rather poignant question should be asked of anyone who proclaims themselves to be an “investor": What's the end goal? 

In other words, what are you trying to achieve by investing your money? 

Most investors will tell you that their goal is to make money by “owning stocks” – that's where the confusion begins.  

Investors assume that “owning stocks” is the key to investment success, but most assuredly, it is not. 

Owning good companies, however, IS the key to investment success.  

Investing in stocks and owning companies are inherently two different mindsets. The former believes that companies are merely stocks whose investment success lies only within the short-term pricing levels of those stocks, while the latter considers themselves owners of successful businesses.  

In other words, short-term fluctuations in stock prices serve only as a distraction from the long-term focus of company ownership. Just take a look at the revenue streams of some of the top companies in America:

With these revenue streams (these numbers are the ANNUAL revenue streams, mind you), should you care what their underlying stock prices are doing in the short term?  

Of course, the answer should be a resounding "NO" because revenue streams are the gateway to the long-term price appreciation of their respective stock prices. 

I can't tell you how many times we've met with prospective clients who fancy themselves as investors, only to find out that their primary focus is on the underlying stock price rather than owning great businesses. 

To wit, I would suggest that owning great businesses, rather than just owning "stocks," boils down to its core as an issue of temperament. 

One temperament is steeped in the long term, while the other is focused only on short-term gains. Therefore, both are subject to wild bouts of fear and to the whims of those who peddle fear. 

Those whose only focus is the short-term gains of their stocks fail to adapt to the mindset needed to achieve long-term financial goals. To finally become a pure and true investor, one must follow a succinct path:  Goals ® Plan ® Portfolio.  

Your Goals ® Plan ® Portfolio is not built in contemplation of temporary stock prices, the economy (which can't be forecasted), or the market (which can't be timed). Goals ® Plan ® Portfolio is the medium for enduring wealth and is managed in accordance with principles and practices that have never failed in the long run. 

The only hope you have as the owner of some of the greatest companies in the world with revenues that boggle the mind and enduring financial success is to own a long-term investment allocation driven by a long-term financial plan – itself derived from the investor's most cherished goals, and therefore unconnected to the current economy and/or the markets. 

This is the only way.  

When you follow Goals ® Plan ® Portfolio, there is no more "this time is different," no care of stock prices, recessions, corrections, bear markets, bull markets, sell-offs, collapses, or blood baths (or whatever apocalyptic term the mainstream media uses). 

Goals ® Plan ® Portfolio is where long-term regret dies. Those who focus on stock prices panic out of their portfolio and thus their plan and their financial goals at the first signs of trouble. 

Simply changing your mindset to own great businesses that endure rather than own "stocks" is the kind of change you may need to get closer to achieving peace of mind with your money that you never knew existed. 

Stay the course, my friends.