Lesson One: You have to be a long-term investor. The facts are compelling. Between 80% and 90% of the investment return in stocks occurs during only 2% to 7% of the time. The other 93% of the time returns have been a minuscule or negative. “It's a marathon, not a sprint," says Browne. This is hard for jumpy investors who are easily rattled by the daily noise of the markets. But the only sure way to capture the market’s best performance is to hang in throughout the good and the bad.
Lesson Two: Over the past five years, value investors have outperformed growth funds by a 5% compound rate of return. That is a huge differential. Browne warns investors to stay away from the glamour-puss darlings of the moment, the sexy high-flying stocks that are being widely promoted. In that way, you can beat the pros. Only 5% to 10% of all professional money managers are value investors.
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