Investment is a Process in Time

Investment is a Process in Time

and time can do so much…

Hy Zaret


I borrowed the title of this post from Hyman Minsky…and in that vein I will quote a few author/investors who were aware a long time ago that...that proper investment is a process in time.

Stocks, also called equities, are shares in a company’s assets and profits. Chosen well, they can provide both growth and income. Over long periods time periods, stocks have been extremely rewarding, generating on average about 9 or 10 percent yearly returns. After adjusting for price inflation but not taxes, the return has been between 6 and 7 percent, depending on the starting and ending points. At that rate, money doubles every 10 to 12 years…The risk of owning stocks declines with time. For example, over intervals of 10 years, investors on relatively few occasions have experienced net losses and these have been small. Over much shorter periods, however the losses can be huge…At the 10-year mark, Treasury bills and bonds have more downside risk than stocks and less upside potential after adjusting for inflation. 

J Anthony Boeckh


The difference between true investment risk and apparent riskiness or market risk is a function of time. yes, stocks can be very risky if time is short...but when time is long enough, the apparent riskiness of stocks evaporates and the favourable long-term returns become increasingly evident. For investors, the risk in investing can be divided by time into short-term and long-term risk.

The real risk in the short term is that the investor will need to sell – to raise cash – when the market happens to be low. That’s why, in the long term, the risks are clearly lowest for stocks, but in the short term, the risks are just as clearly highest for stocks...

To the extent you know your investments will be held for the very long term, you have automatically self-insured against the uncertainty of short-term market price fluctuations, because as long as you stay invested, the price fluctuations of Mr. Market just won’t matter to you. The investor’s best answer to short-term market riskiness is to ignore the interim fluctuations and be a long-term investor.

Charles D. Ellis


Stocks are traded daily, but they are long-term assets. Over the short term, stock market prices are random. Over the long term, they are ruthlessly efficient. If you want to invest for the long term, you should never purchase a stock unless you intend to hold it forever.

Dividends are a prime source of return for long-term investors…The power of long-term dividend growth can be significant.

Compound interest tables show the fallacy of using volatility as a measure of risk. Superior results produced by an additional 1 or 3 percent return per year over the market averages can be obscured by volatility over shorter time periods…But when viewed over long periods of time, superior incremental returns produce stunning differences in performance.

Frederick K. Martin