Successful investing requires a clear understanding of the foundational principles that separate consistent winners from those who struggle in the market. As we look ahead to 2026, investors aiming to improve their results must recognize where many commonly fall short. Two primary requirements must be met: a long-term investing horizon and the discipline to hold stocks across market fluctuations.
Research suggests that without employing both, investors face a steep uphill battle. Firstly, possessing a multi-year outlook is vital, typically spanning three to five years at minimum. This duration allows the underlying business performance of a company to influence returns beyond temporary market sentiment. Secondly, investors must maintain their positions during the inevitable ups and downs of stock prices. Those unwilling to do so risk crystallizing losses or missing rebounds.
A substantive study by Boston Consulting Group spanning two decades highlighted that short-term stock price movements correlate mainly with market valuations, which can be highly volatile and influenced by fluctuating sentiment and news headlines. Conversely, a company’s intrinsic business results serve as the true engine of long-term investment performance.
The erratic nature of stock valuations makes them difficult to predict reliably. There is no consistent, replicable method for timing these fluctuations successfully; outcomes often depend as much on luck as skill. On the other hand, forecasting a company’s future business outcomes is a more attainable challenge. Investors do not need perfect precision but rather a directional accuracy in predicting growth and profitability trends.
Sticking with this long-term approach requires patience through significant volatility, as exemplified by standout stocks like Nvidia (NVDA). An investment of $10,000 ten years ago in Nvidia, despite multiple steep drawdowns—in some cases exceeding 50%—would now be worth approximately $2.2 million. Yet, navigating this path meant tolerating several sharp market declines averaging a 15% drop, or worse, far exceeding the typical volatility encountered by major indices such as the S&P 500.
The lesson is clear: realizing compelling returns necessitates both buying into promising businesses and steadfastly holding through periods of market turbulence. Selling out of stocks during downturns undermines the long-term benefits that accrue from patient ownership.
As 2026 approaches, investors can improve their outcomes by enhancing their ability to remain invested rather than frequently trading in response to volatility. There is a practical behavioral strategy to make this easier that has received little discussion yet can be highly effective: prioritizing investments in companies that an investor genuinely likes and feels connected to.
While it may seem counterintuitive from a purely analytical viewpoint, investing in stocks that one is passionate about can bolster an investor’s mental commitment, reducing the urge to abandon positions during challenging periods. This contrasts with focusing solely on companies that appear to offer the highest upside or lowest risk, which might not inspire the same emotional attachment.
Author Morgan Housel has pointed out the distinction between investment decisions that make mathematical sense and those that work in real-world psychology. Investing in companies about which one feels indifferent can lead to discomfort and quicker abandonment when negative market events occur, since enduring losses on unfamiliar businesses imposes a greater emotional toll.
Reflecting on this concept, I reassessed my own portfolio, realizing that while each holding had a logical thesis for appreciation, the assortment of companies lacked personal interest and engagement. Motivated by this insight, I shifted my approach in 2025 and plan to continue in 2026 by deliberately choosing stocks that I truly admire.
Importantly, this strategy does not abandon fundamental analysis; stocks must still possess solid upside potential and robust business models. However, the portfolio now emphasizes companies I actively enjoy discussing and understand deeply, fostering a stronger emotional connection that encourages long-term holding.
Examples of this shift include my investment in Wingstop (WING). As a family that treats dining out as a special occasion, I appreciate Wingstop’s streamlined operation, which relies heavily on digital ordering and a simple menu, enabling efficiency and high margins. These qualities make it a business model I find particularly compelling.
Similarly, I have increased allocations in Airbnb (ABNB) and Five Below (FIVE). Airbnb holds special personal significance, as our family’s stays in unique locations such as a river-adjacent cabin in South America and a converted church in the Appalachian Mountains provided unforgettable experiences. The company's strong brand presence and impressive cash flow margin underpin my confidence as an investor.
Five Below appeals to me for its straightforward concept: selling affordable, trendy merchandise to younger demographics. The rapid payback period for new stores and the company’s debt-free financial position further enhance its attractiveness.
Additionally, I maintained my position in Xometry (XMTR), even after considerable recent gains. I would likely be inclined to take profits if my conviction were lukewarm, but I firmly believe in its AI-driven platform's potential to revolutionize small-scale manufacturing. Finding Xometry when it was valued at less than $1 billion gives me the sense of participating in an exciting growth journey.
While embracing companies you love carries the risk of potentially overlooking weaknesses due to emotional bias, maintaining a rigorous investment thesis remains essential to ensure rational decisions. Ultimately, buying stocks that resonate personally can increase the likelihood of holding through volatility, which is critical to achieving superior long-term investment results.
In summary, for investors aiming to enhance their performance in 2026, cultivating patience and steadfastness in ownership is crucial. Selecting stocks with both strong fundamentals and personal appeal may facilitate this by aligning emotional and financial incentives, making it easier to endure market fluctuations and realize meaningful gains over time.