WAITING (part 1)
In the investment world, you need patience. Unlike trading or speculating where the short-term benefit comes from being opportunistic, in ‘real’ investing, it is essential for the intelligent investor to wait patiently to reap long-term rewards. Waiting also possesses another virtue: the ability of gleaning more wisdom while waiting for the right pitch. Be prepared to wait for years if necessary. I have learned from Buffett and Munger to be patient. Watching the most successful investors put aside their impatience to just do ‘something’ with the market when there is in fact nothing to be done, was a real-opener for me. All value investors have this and other similar traits in common. Yet at the same time, they are never clones. Even though they start off from ‘the same house’ of their patriarch Benjamin Graham, they follow different paths and explore different streets in ‘the same town’ Buffett calls “Graham and Doddsville”. Over the decades, more than just one have successfully applied an ‘updated version’ of the same old principles to investing (which still work in the modern investment world). Having said that, even the more traditionalist like Walter Schloss and his son have done more than ok.
Whenever I find something very interesting in one of Buffett’s interviews, I watch it multiple times, again and again. It helps me think about how I can put in practice what he is saying or recommending; how I can utilize it in my everyday life. If you’re able to read through some of the quotes of great investors, you’ll find treasure expressed in just a few words. I’ve learnt as a business owner that if it takes a lot of words and negotiating to come to a deal, it’s probably the wrong deal. So as value investors, let’s not forget the key-concept that underpin our investment philosophy: we must remind ourselves each and every day to bid our time. You don’t make money when you buy stocks and you don’t make money when you sell stocks; you make money by waiting.
Humans have a tendency to be impatient and to suffer from boredom. While on the other hand, they also have a tendency to gamble. Investing is all about becoming a better human being in order to succeed. And it’s training in how to be a stoic. The pursuit of good virtues. You have to be able to find the part of yourself that controls your emotions and learn the best way to keep yourself in check. There are certain times that it is crucial you don’t get swept away by emotions; you have to bring to the table rationality, you have to be like Buffett. Let’s utilize the best attributes of being human: our reasoned choice, our rationality. Let’s put them both to work. We’ve conquered this world as a species because of our inquisitive minds. We can do wonderful things and avoid disasters by simply letting facts and reasoning defeat irrationality and weakness of spirit. It’s hard to do it but it can be done. How? With practice. And practice demands time and patience. It requires focus. The good thing about practice is that it requires strength more than having any special talent or a high IQ. It can be achieved by anyone. Don’t be afraid of repetition or practice or starting all over again. If it’s a fun and useful game, why not play it again? It is a huge advantage to have such an attitude (even though stoics are often criticized for it). Being repetitive is a bad thing? Not at all, it works fabulously not only in some aspects of life, but also in investing. Investing is not like cake in a diet: in investing too much of a good thing is a good thing! (to be continued)