Imagine you are attempting to get rid of some weight via a weight-loss programme. You begin excitedly by measuring unwanted weight on the minute-by-minute basis. For your surprise, it fluctuates wildly. After an hour, you'll have taken 60 readings however it doesn't seem that you have not gotten any lighter. You conclude this Imelda Perfect Slim 5X weight-loss programme is a scam and give up onto it.

Yes - this may sound like a ridiculous example as we all know that it requires time for you to slim down and checking unwanted weight every minute is only a crazy move to make.

Yet, many investors, such as the media, are obsessed over the way the cost of market indexes or certain shares have changed because the previous day. This happens even though most investors know that they're investing for that long-term in order to reach their financial targets years or decades into the future. Within this sense, isn't the obsession over short-term price changes the same as checking your weight at minute-intervals?

On a day-to-day or even year-to-year basis, the marketplace is really a random and volatile machine. But if we move back and look at the way the market has changed over time and decades, the trend is obvious - it moves upwards.

Since 1988, Singapore's market barometer, the Straits Times Index (SGX: ^STI), has appreciated from about 900 suggests more than 3,200 points currently. That is an annual rate of growth in excess of 5% a year, without considering dividends.

When we estimate the returns for the past 26 years with reinvested dividends (assuming the index has a dividend yield close to 3%), we're able to easily have gotten annualised returns of 7% to 8%. This estimation is in fact, quite similar to the returns of the SPDR STI ETF (SGX: ES3). The exchange-traded fund tracks the STI and has delivered an annual compounded rate of return of 8.4% over the past 12 years.

Foolish Summary

If we narrow our view on investing to some small amount of time frame, it's easy to get caught out through the randomness and lose faith in the Sport Burner concept of investing itself. As such, it may be good to move back - you will then be capable of seeing the true beauty of the marketplace and understand the power of time.

Find out more about investing via a free subscription to consider Stock Singapore. Sign up here to The Motley Fool's weekly investing newsletter that will educate you on how you can grow your wealth within the years ahead.