The Rational Investor #048: The Value of Patience
Happy Saturday to you,
Welcome to the 48th edition of The Rational Investor Newsletter.
I just finished The Nomad Investment Partnership Letters to Partners by Nick Sleep & Qais Zakaria. Today's quote is from their 2009 shareholder letter. These letters offer great insight into the decision-making and investing principles of two of the great investors of all time. The returns they earned through the flat decade of 2000-2009 were remarkable and worth taking the time to study—even if it’s just to understand their principles like the one mentioned below.
Onto the main event…
Here’s Nick Sleep on the Value of Patience [Bold emphasis is mine]:
“There are, broadly, two ways to behave as an investor. First, buy something cheap in anticipation of a rise in price, sell at a profit, and repeat. Almost everybody does this to some extent. And for some fund managers it requires, depending upon the number of shares in a portfolio and the time they are held, perhaps many hundred decisions a year. Alternatively, the second way to invest is to buy shares in a great business at a reasonable price and let the business grow. This appears to require just one decision (to buy the shares) but, in reality, it requires daily decisions not to sell the shares as well! Almost no one does this, in part because it requires patience - and the locker room set does not do patience - but also because inactivity is the enemy of high fees.”
One overwhelming theme throughout the Nomad Letters is the incredible importance of patience. This is probably the single thing that Sleep mentions in nearly every single letter over the 13 years of the partnership.
And it's a theme that I believe doesn't get nearly the attention that it deserves, given its importance.
Because at every point in the stock market, patience is either being rewarded or required. We cannot know at which point the market will shift from patience being rewarded to required or required to rewarded, but shift it will.
The key to good returns is standing firm during the 100% of the time in which patience is required.
Thanks for reading. I’ll be back next week with more timeless wisdom from great investors.
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