In October 1987, I was thirty years old and working as a CPA with a roster of accounting clients.
In the weeks leading up to what would become one of the most dramatic single-day market crashes in history—Black Monday—I remember telling many of those clients to move to cash. I thought I was being prudent. When the market collapsed, I looked like a genius.
But here’s what I learned: the decision to sell was easy. The decision to get back in? That was much harder.
The truth is, most people don’t time the market—they guess the market.
I’ve lived it firsthand. After the crash, markets rebounded sharply. But they didn’t recover in a straight line. Volatility dominated the landscape for weeks. One day up a few percent, the next down a few percent. This kind of whipsaw action didn’t just shake portfolios—it shook people. The emotional toll was heavy.
Eventually, I remember getting my clients reinvested—but essentially at the same price they’d exited. We endured the stress of exiting and reentering the market only to end up flat. And that experience left a deep mark. It pushed me to reevaluate my entire approach to investing.
That’s when I started developing what’s now become my most fundamental principle:
If you own the right kinds of assets—particularly equities—focus on your timeframe. Because that’s your secret weapon.
Let me explain why.
Three Types of Assets—and Only One Improves With Time
As an investor, you have a limited menu of asset classes. And most fall into one of three categories:
- Flatliners: These are assets that don’t do anything on their own. Gold. Diamonds. Raw land. They’re speculative by nature—you only make money if someone else down the road is willing to pay more. These assets don’t generate income or evolve over time. They simply sit there, inert.
- Decliners: These are assets that deteriorate unless maintained. Think real estate. Buy a rental property and ignore it for a few years? The roof leaks, the HVAC fails, the paint peels. Entropy always wins unless you keep putting cash back in. The same is true for machinery, and physical infrastructure.
- Improvers: These are businesses. Unlike gold or a depreciating asset, a well-run company can improve over time—often without your intervention. It can launch new products, reduce costs, expand markets, and build value internally. In many cases, the best thing an investor can do is simply hold on.
This third category—businesses—is where I believe long-term investors should focus.
Why Equities Are Different
Public companies, especially the ones represented in major indexes like the S&P 500, don’t just sit still. Many adapt. They innovate. They optimize. They learn.
Roughly three-quarters of the companies in the S&P 500 are, in my experience, tend to be improving businesses. Even in difficult years—when revenue growth may slow or share prices dip—many of these firms are actively investing in their own future. They’re building better supply chains, cutting unnecessary costs, hiring talent, or repurchasing shares. These actions often create value that isn’t immediately reflected in the stock price.
That’s why I believe selling during periods of volatility is a mistake. The quote might be lower—but the underlying business may be stronger than ever.
To be clear: I’m not saying all companies go up. Or that stocks can’t decline. Of course they can, and they do. But when you zoom out, over decades rather than quarters, equities have consistently outperformed other asset classes.
That’s not a prediction—it’s a historical observation.
The Problem with Selling
So why don’t I sell? Because when you sell, you’re forced to answer an even harder question: What do I do with the cash?
You can hold cash, sure—but you’ll lose to inflation over time. You can buy fixed income—but over the long arc of history, bonds have significantly underperformed equities. You can chase other asset classes—but many come with higher fees, lower liquidity, and opaque risk.
At some point, most investors who sell their stocks end up right back in the market—often at a worse price in the future.
I’ve seen it again and again.
Thinking in Decades, Not Days
One of the best questions an investor can ask is this: Is the asset I own improving?
If you own a machine and it’s declining in value, maybe it makes sense to sell.
But if you own a business—especially one that’s building infrastructure, improving its software, or expanding its market—you may want to think twice. Because time is your ally.
When I owned Amazon in the early 2010s, the stock would occasionally crater. It was painful. But I looked at what the business was doing: building out distribution centers, launching AWS, cutting costs, experimenting relentlessly. That wasn’t a company in decline. That was a company reinvesting in itself.
The quote was down. The value was up.
That’s the essence of long-term investing: learning to separate price from value. And it requires discipline, patience, and a multi-year view.
Compounding Requires Stillness
Compounding is one of the most powerful forces in investing—but it only works if you allow it to. That means staying in the game. Letting time do the heavy lifting.
Every time you sell, you interrupt the compounding process. You reset the clock.
That doesn’t mean you can never make changes to your portfolio. There are legitimate reasons to sell: changes in thesis, valuation concerns, better opportunities elsewhere. But “fear” or “uncertainty” aren’t sufficient reasons.
In fact, those are usually when you should do the opposite: hold tight.
Disclosures
The opinions expressed herein are those of Nightview Capital and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Forward-looking statements cannot be guaranteed.
This is not a recommendation to buy, sell, or hold any particular security. There is no assurance that any securities discussed herein will remain in an account’s portfolio at the time you receive this report or that securities sold have not been repurchased. It should not be assumed that any of the securities transactions, holdings or sectors discussed were or will be profitable, or that the investment recommendations or decisions Nightview Capital makes in the future will be profitable or equal the performance of the securities discussed herein.
Nightview Capital reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. Recommendations made in the last 12 months are available upon request.
This article contains links to 3rd party websites and is used for informational purposes only. This does not constitute as an endorsement of any kind. While Nightview uses sources it considers to be reliable, no guarantee is made regarding the accuracy of information or data provided by third-party sources.
