As a generation spoiled for convenience and fast results, we often struggle with patience and willingness to endure pain. This was exemplified for me recently when my son asked why it’s taking four days to receive a basketball from Amazon. A decade ago, four days for delivery would have been considered a miracle, but now it feels like an eternity. This lack of patience can be attributed to many converging technologies like instant messaging, emails, mobile cameras and social media, to name a few. These technologies have significantly increased convenience but also shortened our attention spans and reduced our tolerance for waiting.
Julius Caesar famously said,
This sentiment may explain why many people don’t make money in equities. Investing in equities is a long-term game that requires patience and discipline. The journey can be demanding, with years of negative or no returns that lead some investors to exit the asset class without any gains.
The Chinese bamboo tree is a helpful analogy to consider when it comes to patience in investing. It is said that once planted, there are no visible signs of growth for the first four years. However, the bamboo can suddenly grow up to 80 ft in just six weeks. The question is whether it takes only six weeks for the tree to grow as visible to us or if there is a period of unseen growth before the rapid expansion. Similarly, there may be times when there are no visible returns on investment, but if there is healthy economic growth, the price will eventually catch up.
The life span of companies and the competitive advantage they may possess may be shortening on average. This is why investing in a portfolio of companies rather than a single stock is essential. The key is to be disciplined and patient with your investments, tracking suitable growth parameters rather than focusing solely on price action.