I met a guy yesterday who spent the past ten years of his life – and he’s just 32 years of age – destroying his body with alcohol, excessive food, and a sedentary lifestyle.
“I have resolved to be fit, lean and healthy in the next six months,” he told me with great confidence.
Well, not surprisingly, he got irritated when I told him that it might take a little longer than six months to achieve what he wanted.
His reaction wasn’t much different from a cousin of mine, who recently told me how she wanted to become a life coach and was ready to do whatever it took to get there in one year.
When I asked her, “What if it takes you ten years to get there, instead of one?” she had no answer.
Clearly, she hadn’t considered the possibility that years of learning, experience and skill development could be one of the necessary success ingredients in becoming a good life guru. But she wanted the results without all this work…or by investing the necessary time.
My Impatient Generation
Have you noticed how impatient people are these days? Or how unrealistic they are when it comes to the issue of doing what’s required to create lasting positive change?
Of course, I’m myself a part of this impatient generation. But then, I’ve come to understand over a period of time that in these days of instant gratification, there are still some things that simply require consistent effort and commitment over time…maybe, a long time.
Take for instance learning the art of investing for wealth creation.
Over my past 14+ years in this industry, I’ve rarely come across a person who doesn’t want to make a lot of money from stocks. But then, I’ve rarely come across a person who has the patience to spend time and effort in first learning the art of investing before getting down to actually painting his financial future.
Of course, this kind of thinking – of spending time and effort to ‘learn’ investing – is not stimulating enough for most people so they will continue to look for the magical shortcut.
I agree that in the rigidities of modern life, we are trained to be impatient because we’re surrounded by so many instant offerings.
But I firmly believe that we can retrain ourselves to be patient. And believe me, patience is the biggest virtue when it comes to becoming a successful investor.
In fact, not being patient can be a huge source of investing mistakes, as Charlie Munger says…
We don’t feel some compulsion to swing. We’re perfectly willing to wait for something decent to come along. In certain periods, we have a hell of a time finding places to invest our money.
When asked once about whether he was worried about a big drop in the value of Berkshire, Munger said…
Zero. This is the third time Warren and I have seen our holdings in Berkshire Hathway go down, top tick to bottom tick, by 50%. I think it’s in the nature of long term shareholding of the normal vicissitudes, of worldly outcomes, of markets that the long-term holder has his quoted value of his stocks go down by say 50%. In fact you can argue that if you’re not willing to react with equanimity to a market price decline of 50% two or three times a century you’re not fit to be a common shareholder and you deserve the mediocre result you’re going to get compared to the people who do have the temperament, who can be more philosophical about these market fluctuations.
Warren Buffett has also stressed repeatedly on the importance of patience…
The stock market is designed to transfer money from the active to the patient.
Face the Right Direction, and Keep Walking
“If we are facing in the right direction, all we have to do is keep on walking,” goes a Buddhist proverb.
It captures the essence of how we can train ourselves to be patient, in life and while investing our hard-earned money.
Look at patience like a muscle that grows stronger as we exercise it. So if you want to become a patient investor, it’s important you first practice patience in your daily life.
Here is a small exercise I try to do each time I’m faced with a situation that can easily make me impatient – like when I’m stuck in a traffic jam, or in the check-out queue at a grocery store.
In such situations, I earlier used to provide myself with a distraction like the radio, or a magazine, or my mobile phone.
Now I just go through it, and pay attention as the minutes pass in the jam or in the queue. I take those few empty minutes as an opportunity to think over new ideas for Safal Niveshak or imagine stories for my kids.
You might want to start with just a brief exercise, like the 60 seconds that you have to wait for your lunch to warm in the microwave or the red light at a minor intersection.
Then build it up from there, so that your patience muscle becomes stronger and more enduring.
Investor, Be a Grasshopper
It’s true that investing is a sucker’s game in the short term, and there is a far greater chance that you will lose it than win it.
This is precisely the reason why the world’s best investor Warren Buffett’s favourite holding period is ‘forever’.
That’s important because it captures two of Buffett’s key beliefs:
- Compounding is powerful, and
- What happens in the short term is completely out of your control.
“Buy a business, don’t rent stocks,” Buffett has been advising for years. And then he adds, “An investor should ordinarily hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.”
If you seriously want to build wealth from the stock market over the long run, take this advice from Thomas Phelps (author of 100 to 1 in the Stock Market) to your heart – Buy right and hold on.
Or, after having bought a quality business for your portfolio, remember what the former American president Ronald Reagan once said – “Don’t just do something, stand there!”
Phelps concludes the first chapter of his book with this powerful thought from George F. Baker…
To make money in stocks you must have “the vision to see them, the courage to buy them and the patience to hold them.”
Patience is the rarest of the three, but it pays off in the long run.
That’s how fortunes are made in the stock market.