The Future Belongs to those who are Patient

 "The stock market is a device for transferring money from the impatient to the patient.” —Warren Buffet

 

As a child, we may have heard a story where ¨patience was a virtue”. ¨The Little Engine Who Could” and “The Tortoise and the Hare” are a couple of instances where consistency, perseverance, and patience paid off for the protagonists, and when it comes to investing, patience can pay off for us too. However, we will need one more thing.

Warren Buffet, a long-term investing expert, has said that ¨the stock market is a device for transferring money from the impatient to the patient, ¨ and where we can see this come into play in the stock market is within our decisions to sell, buy, or hold investments.

Sell too early, and the emotional thought of missing out on potential profits can impact decisions; wait too long, and the idea of shifting markets may preempt logical choices. So, how does patience pay off? Over the long-term, instead of constantly buying and selling, hold value-based investments, which despite short-term market volatility, can add value may do well over time.

In value-based investing we forgo the option to sell or buy in the short-term and have patience and hold our investments for the longer term. In short, holding a quality company in the long-term (with patience) can sometimes prove to be more valuable than continuous trading. Again, assuming we are not trying to make quick money from potential spikes in the market. There are times when our investing and strategy plans requires us to reallocate our investments. When we invest for long-term value, the key is patience (and time). However, changes in fundamentals of the assets in our portfolio or market conditions may require more frequent changes.

We also need a strategy and persistence. As mentioned before, it is important to plan our investment strategy: how much money is investable, how much money needs to be kept on hand, how much money needs to be held in savings, our personal allocation ratios as well as our goals and objectives.. Once we know all of the details about our portfolio, patience then becomes a valuable asset. It is not patience alone that will pay-off, but instead, strategic investment-moves paired with patience that will dictate our financial future.