HINDSIGHT is a wonderful thing – but foresight is better.
There is a story told of a fur trapper who was out in the middle of the Yukon in 1919.
There was nothing unusual in that, except that he owned Coca-Cola shares. Good news for him, you might say.
Out in the wilds for years at a time, he had no idea that his shares more than halved in value from $40.00 to $19.50.
He also may not have known of the chaos created in 1929 – he simply trapped on in blissful ignorance.
That he eventually met with his death came to light years later but it took until 1999 to locate some of the beneficiaries of his estate and the descendants of others.
Having no instructions and, in fact, no knowledge of the trapper’s fate for most of the time, the Estate had held the shares and re-invested the dividends.
Recently, each Coca-Cola share, worth $19.50 in 1919 was worth $3.7 million. It is an under-statement that the beneficiaries were ecstatic.
With the benefit of foresight, our trapper would definitely have held onto his Coke shares.
In fact, he’d have bought more. Without foresight, and perhaps with a paper of the time, he’d have been quick to get rid of Coca-Cola.
He certainly wouldn’t have bought more and he might have papered the walls of his cabin with the certificates.
While this is a dramatic example of the returns that investments can make, it does illustrate an important point very well.
For successful investing it is foresight and the long term that matter – not the hysteria of the moment.
Short-term results only become a problem for those investors who don’t have long-term goals and vision to ride out the rough patches.
It is important to remember that markets go up and down.
While it is tempting to sell out of an investment after its value has fallen, historically, investors who stick with their investment strategy have gone on to recover and enjoy strong investment performance.
