130 | Paul Merriman | The Ultimate Buy and Hold Portfolio

Avoid Panic

Investors often face the challenge of maintaining composure during market volatility. Paul Merriman emphasizes the importance of staying the course and understanding oneself to avoid impulsive decisions. He shares a historical example from 1929 to 1938, where consistent investment in small-cap value stocks yielded a 10% compound return despite initial losses 1. This mindset encourages young investors to view bear markets as opportunities to buy valuable assets at lower prices.

It's our parents and our grandparents that may be sucking gas and not feeling good about having the market down, but we who are dollar cost averaging in to great asset classes, never an individual stock, because you could lose everything that way.

--- Paul Merriman

Paul also acknowledges his own fears and the tendency to gravitate towards bad news, highlighting the human aspect of investing 2.

   

Know Yourself

Self-awareness is crucial in aligning investment strategies with personal risk tolerance. Paul Merriman advises investors to understand who they are and where they need to go, emphasizing that emotional hurdles often pose the greatest challenges 3. He suggests that finding the right balance of risk and return can transform an investor into a successful buy-and-hold strategist.

If you could understand yourself, let's look at the equity asset classes, the stock classes. I don't care about individual mutual funds. That's not what makes you money.

--- Paul Merriman

Paul also advises ignoring market noise and focusing on long-term goals, recommending Jason Zweig's book as essential reading for young investors 4.