In value investing, patience is probably one of the most important traits we should have. It is very difficult to sieve through all the noise in the market and focus on the fundamental drivers and sticking to your long term strategy. In this age of instant information (and disinformation), market reactions seemed more short tempered. Greed and fear became more exaggerated than ever.
In 1960, the average period for holding a stock was 8 years and 4 months. Today is much lesser at only 4 months. Markets are reacting to all the little short term events and click bait headlines. People are checking stock prices every 30 seconds. Personally I feel that quarterly reporting by firms also makes us myopic and think very short term. The challenge for investors is patience and wait for the companies you are invested in to just do their thing which is to make money.
This is what separates the good investors and the bad. By learning to ignore the constant inflow of information and focus on their long term goals, they are able to maximize their returns. Whereas bad investors are only obsessed with earnings beat and chase after good performing stocks, trading in and out of positions constantly. For them, it is very hard to be out of the market, waiting for the right opportunity while everyone around them seems to be making money.
When I was vested in 800 Super Holdings (SGX:5TG) in 2015. I did my homework and I was very confident that this will be good investment opportunity. At that time, it was not a well recognized stock (well, waste management doesn’t sound sexy to most people). I’ve waited for more than a year before the stock price climbed. During this period, I’ve always believed that it was a good company with high growth prospects, even when it was not moving at all. Finally, people started noticing this gem and 2 years later I managed to sell at more than 300% gain.
You can’t make a baby in a month by making 9 women pregnant, no matter how bad you want it. It is important to have patience for the right investment to come and not having the itch to be vested at all times. Don’t jump at any investment pitch that comes your way. When the golden opportunity comes, always bear in mind to have patience and a good long term outlook to let them work out. The greatest trader of all time, Jesse Livermore, couldn’t have said it any better. “It was never my thinking that made the big money for me. It always was my sitting.”
Stop staring at your portfolio.