I know, I know. We live in the age of high-speed Internet, iPods, BlackBerries, and Instant Messenger. We've become accustomed to getting not only what we want, but getting it when we want it. We can get up-to-the-second stock quotes on our cell phone while lounging on the beach in Bermuda, or digitally record our favorite show so we can watch it whenever it's convenient for us. Life ain't bad.
But don't let the impatience of our fast-paced life persuade you to demand instant success from your investments. Alas, in the world of finance, one thing has stayed the same over the years and is virtually certain to remain the same in the future: If you want to do well with your investments, you must have patience, my friend.
One of the biggest problems investors encounter is that they seem to forget what the stock market actually is. It isn't a slot machine. It isn't the lottery. There's no magician pulling money out of a hat. It's just a way for us to own small parts of real businesses. The market should, in theory, perfectly track the value of these businesses, but as we all know, the prices of stocks get bucked around for all sorts of reasons -- many of which have to do with people becoming impatient and demanding short-term results.
Most people don't have the patience to care about what earnings will look like three to five years out; they're concerned only with what the stock is going to do in the next few days or months. Here's some advice: If you find yourself constantly checking stock quotes to see where your investments are trading, find a hobby to keep yourself occupied.
Are we there yet? How about now?
Sure, it would be nice to consistently make money day in and day out. And yes, maybe some top-tier hedge-fund managers like Steve Cohen have been able to exploit small inefficiencies in the market that have produced consistent returns. But such performance is extremely rare. Even the world's top investors, such as Warren Buffett, Mohnish Pabrai, and Eddie Lampert, have undergone downturns in their investments that would have scared the pants off other people, only to be rewarded handsomely after ridiculous amounts of patience led to outsized returns.
Take Buffett, for example. After Berkshire Hathaway's
A more recent example comes from value investor Pabrai. In 2002, he began purchasing Universal Stainless & Alloy Products
Zen masters at work
Even as we speak, hedge-fund manager and Sears Holdings
Fools, we all know it can hurt to watch our investments tank, especially when other stocks are going through the roof. Don't let yourself fall into the short-term trap. Oftentimes, the best rewards don't fall in front of us as soon as we demand them.
For related Zen-like Foolishness:
Fool contributor Morgan Housel does not own shares in any of the companies mentioned in this article. He appreciates your questions, comments, and complaints. The Motley Fool holds stock in Berkshire Hathaway. The Fool's disclosure policy could give the Dalai Lama a run for his money when it comes to patience.