Every year brings a few, unforeseen wrinkles to the investment landscape (this year, the conflict in Ukraine would likely get the nod, though it is merely June). The temptation to sell during such controversy can be strong, but it also can be very wrong, and it is not something that we typically do. Counter to much of what one hears in the financial media, which typically emphasizes trading activity, we hold our positions for a number of years. And there’s a logic to that.

First, we attempt to invest in exceptional companies. Exceptional companies are just that: They are the exceptions. They are unique. When we can invest in them at a fair price, we do it, and we sell only when the business economics change or the price becomes significantly overvalued. Naturally, this does not argue for a lot of trading. Our portfolio turnover* tends to average around 10% to 20% a year, which is on the low end in our industry.

Second, we seek to avoid one of the mistakes that professional investors are capable of making: Harvesting profits too soon. While the adage that “you can’t get hurt taking a profit” has some truth to it, this can also lead to expensive mistakes. Let’s say you invest in a company and the price doubles in a year. You may feel pretty smart taking that profit and moving on. However, we’ve seen great companies simply correct a bit, or move sideways for a time and then proceed to double and then double again! The quick sale might ultimately cost you a lot of money. Patience is nearly always your friend when investing in the best-of-breed growth companies, in my opinion, especially when they are priced fairly. High turnover, or a panicked sale, can be a recipe for outsmarting yourself.

Long-term investing suits our bias towards investing in quality, durable growing businesses. It also follows the logic of investing in equities too: They are long-term instruments. We will continue to be long-term investors, unforeseen wrinkles or not.

* Portfolio turnover is a measure of how frequently assets within a fund are bought and sold by the managers.