Imagine having a million dollars to buy a business. This investment will go to feeding, clothing and sheltering your family so you need to be smart about it. The pressure is on – what will you do?

If you’re like today’s average investor, you’ll put that million dollars to work in a different business every few months*. You won’t know much, if anything, about the business except its stock price. You’ll buy and sell businesses impulsively based on as little as a tip from a friend, what other investors are doing or the news of the day no matter its relevance. Sounds pretty risky considering how integral the money is to your well-being, but that’s how you’ll behave. You’ll leave your outcome primarily to chance, the definition of gambling.

Investing doesn’t have to be such a gamble nor should it be. When you invest in the stock market – be it individual stocks, mutual funds or ETFs – you’re buying shares of public companies. Doing so makes you a business owner and it helps to think like one to be successful.

Business owners focus on skill over luck, which they apply to growing their businesses and building something enduring. With a time horizon of years, if not decades, they’re able look past short-term noise and avoid overreacting to minor events that have no lasting impact on their operations.

Investors would be wise to follow suit. How you respond to inevitable stock price movements can mean the difference between losing money “on paper” and actually locking in losses that you may never recover. Businesses can simply take time to reach their potential, and the longer your perspective, the greater your chances of seeing positive returns.

^{Source: Bloomberg LP. As at December 31, 2017. Rolling total returns in US$.}

Taking the long view is easier said than done when you don’t really understand what you’ve committed your money to. True business owners are at an advantage because they know their businesses inside out. As a result, they’re keenly aware of what has – or hasn’t – transpired to cause the value of their businesses to rise or fall. The average investor, not so much.

On one hand we’re bombarded daily with news and headlines on public companies and can watch second-by-second changes in their stock prices. But any analysis tends to end there, with an eye firmly on the recent past instead of the distant future. Investors may be getting information they think they want; unfortunately, it doesn’t always lead them to make reasoned decisions.

Although investing isn’t a 100% safe bet, investors can get much closer to guaranteed results with simple behaviour adjustments. Legendary investor Ben Graham stipulated that an "investment is most successful when it is most businesslike”**, and that “upon thorough analysis, promises safety of principal and an adequate return."† That’s what investors should strive for, to be as business-like as possible with their money. Only then are they investors as opposed to gamblers. To those who disagree, we say good luck – you’re going to need it.

^{Source, average EdgePoint investor returns: CIBC Mellon. Average EdgePoint investor return is the average money-weighted return net of fees across investors who held EdgePoint Portfolios from December 31, 2012 to December 31, 2017. Approximate asset breakdown: 56% in EdgePoint Global Portfolio, 18% in EdgePoint Global Growth & Income Portfolio, 15% in EdgePoint Canadian Portfolio and 11% in EdgePoint Canadian Growth & Income Portfolio. Money-weighted returns represent a client's personal rate of return taking into account the client's decisions regarding the timing and magnitude of cash flows in and out of their portfolio. Source, inflation: “Monthly Consumer Price Index Data”, Statistics Canada, http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=3260020&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid.}