The Best — And Worst Parts About Being a Long Term Investor
No one’s gonna actually admit that they went to get rich quickly. But most of us want to. Because trust me, no one wants to actually get rich slowly. And I mean slow. Real slow. None of that making-it-real-big-real-quick stuff. More like Buffett-slow.
Nah. We’re way too impatient for that. Just turn to cryptos (or meme stocks) and you’ll see all the many, many, many desperate attempts at making it Big — and Quick. Oh, but after their short-lived trip to the moon they mostly came crashing right back down. Talk about a reality check!
But for the most part, these sort of things are so unsustainable and it’s also highly unlikely that you’d have bought (at the right time) and sold (at the right time) to give you that pile of money you’re no doubt after.
The funny thing is that no one quite hears the stories of those who lost it big (and quick) on crypto or the stock market. That’s way less fun and not in the slightest bit entertaining and, well, frankly it’s a party-pooper!
We want to at least try and fool ourselves that it’s so easy to make money quickly. But it’s not. Yet I think that’s precisely how it’s set up to be.
Hard to come by, hard to let go
Remember that exam you studied so hard for back in the day? I bet you remember the grade that followed. It felt good. Your efforts were rewarded. Because the harder something is, the more you’ll value it. The effort we put into something makes us appreciate it all the more. I guarantee you that grade would not have felt nearly half as good if you had revised for all of 5 mins and had scooped up that A+. No way José.
It’s the same when it comes to making money. The longer and harder it takes for you to generate your returns, the more you’ll value it. And the more you value it, the more likely you are to hold onto it.
And that’s what you want. You want sustainable wealth. The kind that can give you the life you want. The kind that can take you from where you are now to where you want to be.
Without investing, well, it’s all just a dream really.
Hold off! Resist the temptation to do something
I think for many, the hardest part about playing the long game is the waiting. And the doing nothing. Having the patience and self-control for all those years isn’t going to be easy.
It won’t be easy to hold onto your investments when markets take more than a tumble. Ahem, right now. Your patience will carry you through while many will have already quit. It’s the only way to gain advantage over the market timing them are no-go-zone!
When it comes to investing, patience is the surest way to beat the market. See, most people are just way too impatient. They want results. And fast. But nothing worthwhile happens overnight. Not your lil biz nor your side gig. They took time, effort and a big dollop of patience.
We’re living in an era of hyper-impatience. It’s time to dial back on all this immediacy.
It doesn’t really help that we’re living in 2022 either. In the most privileged time ever where tech is advancing at a speed faster than lightning. It continues to make our daily lives easier and simpler but its side effect: we’re getting lazier and more impatient by the minute.
And, while being lazy can actually help your investments, avoiding that meddling and just letting compounding do its thing, impatience is where the problems come from. Patience is becoming harder and harder to practice.
From Deliveroo to Amazon, we’ve got companies at our beck-and-call. And I’m not 100% happy about that. Sure, they’re great when you’ve made it home just before the clock strikes 00:00 and are so tired you can’t even walk to the stove to cook yourself something. So, you order a Deliveroo.
But the more these things exist, the less effort we put into things. And we become people that expect things here and now. And in the land of investing, wealth doesn’t get built overnight. And while now it’s groceries in 10, soon it’ll be groceries in 1. Minutes that is.
Patience is becoming harder and harder to practice. And that’s becoming a real problemo.
Patience is precious. Don’t let anyone tell you otherwise.
All this impatience means that people end up quitting too soon. When they don’t see results. When the going gets tough. That’s when most run outa the door. Like in March 2020.
Markets tumbled. They sold. They quit.
On the other side of the spectrum, you had a whole bunch of patient people. The ones who waited. And waited. Who did nothing. Waited. And waited some more.
And do you know how they were rewarded? With a big boost in their portfolio. A whopper boost.
Because markets across the world recovered. And so much quicker than anyone had expected.
Anyone can, but will you do what it takes?
We all want to make it yet are we patient enough to be able to? Because with patience, anything is possible. It doesn’t require a high IQ or any special talent, really.
You’ve gotta be able to give up your desire for short-term gains and trade it for long-term freedom. The kind that’ll make it all worth it, in the end.
But in the realm of investing, it’s in the short-term where all that jazz is happening. It’s noisy. It’s fun. It’s attention-grabbing. From inflation to supply chain issues and now this war in the East. People trade on all this noise.
It steers them off-course and they can lose sight of why they were investing in the first place.
But why follow the rules to a whole different game?
Your game is in decades; not days. Never forget that.
I love this quote by Benjamin Graham (Buffett’s mentor): “In the short run, the market is a voting machine but in the long run it is a weighing machine”.
This couldn’t be more relevant. In the short-term, people chase the best stories, regardless of fundamentals.
It reminds me of Donald Trump’s SPAC that shot up by 1,200% on its first day of trading. Madness is an understatement! And much of what we’ve seen during this past year are companies with less-than-stellar fundamentals (that’s me being nice) being listed at crazy prices whose prices get pushed up yet higher.
But in the long-run folks, only the very best businesses win. And you want to stick around for that.
Long-term investing takes time, patience and consistency.
Give up too soon and you won’t get that compounding effect. The real eighth wonder of the world. The kind that gives you real wealth.
So, dear friend, dare to stick around.
Something special will be waiting for you on the other side.