Growing up in rural South Dakota, I always wondered how farmers could put in so much work without seeing any money for months. It seemed like a risky bet, relying on things like weather and market prices that they couldn’t control.

Think about it: a farmer plants seeds and then has to wait months, maybe even a whole year, to reap any reward. It’s not like they can expect a full crop right after planting. Yet, regardless of an extended timeline and unknown future, they insist on making this investment with confident assurance it will be good for their future self and family. I believe how we aim to realize profits in investing should be a similar concept, but to an even greater extreme. Warren Buffett once said “his favorite holding period is forever”. This type of patience is hard to find within investors today.

In an age where instant gratification is the norm, the art of patience is often overlooked, especially in the realm of investing. With platforms like Robinhood and 24-hour crypto trading, the temptation to chase quick gains is everywhere. However, the reality of achieving success through this path seems quite difficult. In fact, one study shows that over a 12-year period, only 5% of active retail traders made any profit at all.

So, what sets apart the successful investors from the rest? I believe the answer is patience.

Being a patient investor means taking a long-term view of your investments and resisting the urge to constantly buy and sell based on short-term fluctuations. Instead of trying to time the market or chase the latest trends, patient investors focus on building a diversified portfolio of high-quality assets and holding onto them through market ups and downs.

Principles to follow as you work towards becoming a patient investor:

  1. Develop a Solid Investment Strategy: Before diving into the market, take the time to develop a well-thought-out investment strategy that aligns with your financial goals and risk tolerance.
  2. Do Your Research: Knowledge is power when it comes to investing. Take the time to research the companies or assets you’re considering investing in, and make informed decisions based on fundamental analysis rather than speculation or hype.
  3. Stay Disciplined: Once you’ve developed your investment strategy, stick to it. Avoid the temptation to deviate from your plan based on short-term market movements or external noise. Rome wasn’t built in a day, and neither is wealth. Embrace patience and trust in the power of compounding returns to grow your wealth over time.

The path to financial success isn’t paved with quick gains and impulsive decisions. As a financial planner, I advocate for the virtues of patience, discipline, and strategic planning. By following the guide above, I believe you can navigate market volatility with wisdom and confidence.

One last quote from Warren Buffett (because he is my favorite investor!): “The stock market is a device for transferring money from the impatient to the patient.”

Choose today to be the patient investor.

 

https://faculty.haas.berkeley.edu/odean/papers/Day%20Traders/Day%20Trading%20and%20Learning%20110217.pdf