The Best Performing Stocks Have Frequent & Significant Downturns

Morgan Housel has another excellent column on the common volatility of stocks, including the best performing stocks in the past 20 years. He includes the classic Munger quote:

"This is the third time that Warren [Buffett] and I have seen our holdings in Berkshire Hathaway go down, top tick to bottom tick, by 50%. I think it's in the nature of long-term shareholding that the normal vicissitudes in markets means that the long-term holder has the quoted value of his stocks go down by, say, 50%.

In fact, you can argue that if you're not willing to react with equanimity to a market price decline of 50% two or three times a century you're not fit to be a common shareholder, and you deserve the mediocre result you're going to get compared to the people who can be more philosophical about these market fluctuations."

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Noah Smith says "You're Making Your Financial Adviser Rich"

Stocks for the long run...