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5 Ways to Maintain a Competitive Edge, No. 5: Be Willing to Outwait Your Rivals

By Motley Fool Staff - Updated Oct 12, 2017 at 11:43AM

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You’ll never beat the giants (or the investing supercomputers) on speed. But patience is a tool that is in short supply.

Getting ahead isn't simply a matter of having a great idea, nor of being intelligent or improving your mastery in your chosen arena. The key is to focus on the edge that you can keep for the longer term. In this episode of Motley Fool Answers, Alison Southwick and Robert Brokamp are joined by former Fool Morgan Housel to talk about figuring out what your sustainable advantages are, both in investing and in life. He lays out five possible advantages that you and the businesses you invest in might already have, or want to cultivate, in service of acquiring an edge. The final tip: Think and act with your eye on the long term. Investment banks and high-speed trading computers are playing the short game, but individuals can still beat them on the deeper time horizon. Plus, the Fools talk about their own personal competitive edges.

A full transcript follows the video.

This video was recorded on Aug. 22, 2017.

Alison Southwick: The last one is the willingness to wait longer than your competition.

Morgan Housel: I think this is especially true for individual investors, but it spans a lot of fields including business and just people's careers and whatnot. And to me it's the most tangible and the most realistic competitive edge that an individual investor can have. Because if you're an individual investor and you're trying to compete against the intelligence of Goldman Sachs or supercomputers, that's just not something I think you can realistically say. "I'm smarter than the analysts at Goldman Sachs are."

If you can say the analysts at Goldman Sachs are only willing to wait for six months and I'm willing to wait for five years, that's an edge. And I think it's really the only edge that exists for individual investors these days, where the parsing of information has been [so competitive] that it's hard for any individual investor, no matter who you are, to have an informational edge on anyone else.

But if you can have a time horizon edge and just be a little more patient than everyone, that is something that I think [will accrue] superior returns to you over time. Over a long period of time. Waiting longer might mean that you need to have a 10-year or a 20-year time horizon. If you can truly have that, then good things are almost certainly to come to you.

Southwick: What would you say is your own personal, sustainable source of competition? A competitive advantage? What's your edge?

Housel: I would say that as a writer it's explaining complicated things in a simple way. It's what I try to do.

Southwick: Yes, I would definitely say that's your sustainable competitive edge. It's one of them.

Housel: It's hard.

Southwick: You're good at it.

Housel: Thanks.

Southwick: Bro, how about you?

Robert Brokamp: This is so cliché, but I would just say that I am willing to work hard. I put a lot of effort into a lot of things I do, and I try to do lots of different things. I was in Florida over the summer where I grew up, and we drove by where the old Blockbuster Video used to be. I pointed out to my kids it's now a bank. And I was explaining to them [that] you cannot have, as a business or as a person, just one skill or just one thing because at some point the world is going to change and people aren't going to value that. So, I would say that my competitive edge is because I'm willing to try different things.

Housel: That's good.

Southwick: That is good. That was not one of the five options that Morgan laid out here for you.

Brokamp: Well, do I have to stay with one of his?

Southwick: No, you can come up with your own, I guess.

Housel: It was good, though. I might add that as a sixth to the article.

Southwick: All right. Rick, do you have an answer?

Rick Engdahl: Patience. And I don't hold grudges.

Housel: That's a good one.

Engdahl: That's why this show works.

Southwick: Ouch!

Brokamp: But you're also adaptable. I mean, when you joined the Fool you were doing tech work, essentially. Right? Design work?

Engdahl: Yes, design and front-end development, yes.

Brokamp: You've had several jobs, here, at The Motley Fool. You're also very adaptable.

Brokamp: And you, Alison? What's your competitive advantage?

Southwick: I think -- and I don't know if this is my competitive, sustainable advantage -- but I think I'm pretty good at getting a bunch of different people together to make things [happen].

Housel: I'd agree with that.

Brokamp: I was going to say. You've got awesome people skills.

Southwick: Yeah. I can rally a group toward a cause.

Brokamp: Computers will not be able to replace you. That's what we're saying.

Southwick: I hope not.

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