The Rational Investor #021: William Green on the Value of Patience
Happy Saturday to you,
Welcome to the 21st edition of The Rational Investor Newsletter.
This is the second quote from the fantastic book, Richer, Wiser, Happier: How the World’s Greatest Investors Win in Markets and Life by William Green. This book will invariably be quoted again as it includes thoughts, philosophies, and ideas from a wide range of great investors. It’s a long read, but I believe it contains as much investing wisdom as any book you will find.
Today’s quote comes from the chapter highlighting investment ideas from Nick Sleep & Qais “Zak” Zakaria. For today, we focus on the value of patience.
Onto the main event…
Here’s Green/Sleep/Zakaria/Marks on the Value of Patience [emphasis is mine]:
If you and I hope to achieve long-lasting success as investors, we need to follow their example by systematically resisting the external and internal forces that push us to act impetuously. With that in mind, I ignore all of the useless media chatter about looming market corrections and crashes. I go weeks on end without checking how my investments have performed. My default position is to do nothing.
…
My costliest mistakes have come whenever I grew impatient or envious of other people’s returns and strayed off course by gambling on private companies or individual stocks that held the promise to a racier route to riches. The paradox here is that the slower road almost always proves to be faster in the end.
The investors I admire most tend to be heroically inactive, not because they’re lazy but because they recognize the benefits of patience. Howard Marks once told me, “Our performance doesn’t come from what we buy or sell. It comes from what we hold. So the main activity is holding, not buying and selling. I’ve always wondered if it wouldn’t enhance an organization to say, ‘We only trade on Thursdays.’ And the other four days of the week, all you can do is sit and think.”
I love the last idea from Marks. As Main Street investors, I think we could take this even further…what if you could only trade one day per year (the exception being dollar-cost-averaging into our portfolio)?
How might everyday investors like us improve our results by following such a simple rule?
I think most people’s investing results would improve mightily since it would take away almost all temptation to time the market. Such is the value of patience and being a ‘permanent owner of equities.’
Thanks for reading. I’ll be back again next week with more timeless wisdom from great investors.
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