Patience and discipline
Investing is simple but not easy: managing yourself is harder than picking the right thing to buy.
In One Sentence
Patience is being willing to wait while compounding slowly does its work; discipline is following the same method for decades without letting your emotions rewrite the plan.
Why It Matters
The method fits in one sentence; the test comes in the decades that follow: not fleeing in a crash, not chasing in a frenzy, not fiddling when you're bored. Yet human nature is impatient. I love the saying "still waters run deep": only when your mind is calm can you hold on. Here's one tool for you: set up dollar-cost averaging, then look at it only once or twice a year.
One Number
In the ten years to the end of 2009, the American fund CGM Focus made about 18% a year on average, yet its investors lost about 11% a year on average, undone by buying high and selling low (Morningstar · Chapter V).
In the Book
Chapter I says it's what you need to save your first nest egg. Chapter V lists patience, endurance, persistence and discipline as an investor's emotional intelligence. Chapter VII shows its power through the stories of three ordinary people.
Go Further
- Long-term holding Long-term holding sounds simple; what keeps you holding on is patience.
- Compounding Most of what compounding produces comes late, and the impatient never get to see it.
- The timing trap Give in to the urge to guess highs and lows, and you'll interrupt compounding.
- André Kostolany He boiled down what an investor needs to four things: money, ideas, patience and luck.