I have mentioned in many articles before that a successful investment must be a boring, lonely, tedious, long-term, and repeated basic enterprise research. There is no other way. What John Train said “Investment is the craft of the specific.” it’s is exactly this truth. But the problem is that humans are becoming more and more impatient. Boring, lonely, tedious, long-term, and repeated basic enterprise research, As well as the necessary attention to detail inspection; it will cause impatience. Once impatient, people will lose patience. After a few attempts, almost all people will give up.
Buffett’s shareholders letters
In 1957 letter to Buffett partnerships, he wrote: “Obviously during any acquisition period, our primary interest is to have the stock do nothing or decline rather than advance. Therefore, at any given time, a fair proportion of our portfolio may be in the sterile stage. This policy, while requiring patience, should maximize long term profits.”
In 1967, Warren Buffett’s Letters to his partners, he wrote: “Market conditions peculiar to the stock gave us hope that, with patience, we could buy substantial quantities of the stock without disturbing the price.”
It’s right to do nothing
Pascal famously said, “all men’s miseries derive from not being able to sitin a quiet room alone.” Munger said that it was never my prayer that brought me a lot of wealth, it was always because I was sitting still. It is rare for people to be correct and sit still. The market can’t beat them, it’s themselves who beat them. You must have the courage and wisdom of patience, so that you can sit still. Buffett’s statement is that “many of our successful investments can be attributed to inactive investment behavior; most investors are unable to resist the temptation to keep buying and selling.”
The unanimous consensus of the masters
Rarely, patience is the unanimous consensus reached by almost all masters on investment wisdom. The following is as far as I can remember, what the successful masters in the investment industry have made on patience, the traits that a successful investor must have:
- Munger said, “The desire to get rich fast is pretty dangerous.” “There isn’t a single formula. You need to know a lot about business and human nature and the numbers… It is unreasonable to expect that there is a magic system that will do it for you.”
- Buffett said more clearly, “No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.”
- John Templeton underlie his investing principles in 1990 that “It’s all a question of patience.”
- Value investment master Seth Karaman said that “because value investors need to have patience and strict discipline. Value investing is the only strategy that can truly avoid risks. Almost everyone will say that risks should be avoided.”
- Buffett said “Successful investment takes time, discipline, and patience.”
Their views are fairly consistent, and time, discipline, and patience are all indispensable elements for investment success.
Typical behavior of most investors
Common investors have the following common investment behaviors, which are a sign of impatience:
- People think that long-term investment is too difficult, resulting in numerous stocks.
- People don’t want to wait for a major correction in the market or a once-in-a-year crash before entering the market to pick up the bargain.
- People are unwilling to invest in ETFs, believing that the subject matter is too boring and the speed of property accumulation is too slow.
Modern people are getting impatient
I mentioned the following statistics in 1-4 of the book “The Rules of Super Growth Stocks Investing”:
- The stock turnover ratio on the New York Stock Exchange rose from 42% to 78% between 1982 and 1999.
- From 1990 to 1999, the stock turnover ratio of the Nasdaq increased from 88% to 221%.
- From 2016 to 2019, the stock turnover ratio of Taiwan’s concentrated market common stocks was about 63%, 84%, 83%, and 73%, respectively, and in 2020 it rose to 126%.
- The stock turnover rate of the Chinese stock market in 2019 was around 300%, which shows that modern investors are becoming more and more impatient.
James Clear, author of the book “Atomic Habits”, has a quote in the book that can be used as a summary of this article “The biggest obstacle to success is not failure, but boredom.”
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