The Rational Investor #032: William Green on the Value of Patience
Happy Saturday to you,
Welcome to the 32nd edition of The Rational Investor Newsletter.
After a week away for our annual trip to the Outer Banks, I’m back with another great quote.
This week’s quote comes from the book Richer, Wiser, Happier by William Green, which I’ve quoted from before. As I said last time, it is one of my favorite investing books because Green curated and consolidated the investing beliefs and philosophies of the world’s greatest investors. (Clearly, this is a project that is near and dear to my heart.)
In a world where nearly every pundit is flashing a warning sign about the market supposedly being overvalued, overconcentrated, or whatever, patience is sure to be more valuable than ever, which is why I chose the following passage.
Onto the main event…
Here’s William Green on the Value of Patience [Italic emphasis is that of the author, Bold emphasis is mine]:
“If you and I hope to achieve long-lasting success as investors, we need to follow their example [referencing great investors] 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.
Hence, the majority of my portfolio sits quietly in two index funds and a value-oriented hedge fund, all of which I’ve owned for at least twenty years.
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 of 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 or 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.’”
If there’s one characteristic or principle that distinguishes successful investors from failed investors, it is the willingness to be patient.
As one small piece of evidence in support of that statement, I’ve long observed through my experience and logical intuition that I have yet to meet even one single investor who has regretted buying a market-like portfolio and then holding it forever, but I’ve met countless investors who have regretted various buy and sell decisions.
This should tell us a lot. The key to avoiding long-term regret—and by extension, enjoying long-term success—is simply to own your portfolio in perpetuity.
Thanks for reading. I’ll be back again next week with more timeless wisdom from great investors.
**********
Whenever You’re Ready, Here Are 3 Ways I Can Help (For Financial Advisors Only):
If you’re interested in starting a client newsletter, I wrote an article on Michael Kitces's blog about the value of email newsletters and how you can do it effectively in your practice. Here’s a link to the article.
If you’d like to make publishing a high-quality client newsletter as easy as possible to better leverage your time and resources, click here to learn more about our Client Memos membership.
If you have a question about client newsletters or anything advisor-related, feel free to reply to this email, and I’ll do my best to answer it.
