Patience: The Key to Long-Term Investing Success

In a lot of ways, instant gratification can be a good thing. If you need a particular piece of equipment for a project, you can check online to see if it’s available at a nearby store or—if it’s not—you can have it shipped to you overnight. If a catastrophic event like a hurricane or tornado is about to happen, you don’t have to wait until the next day’s morning news—you can get an alert on your phone. If you’re running late to an important meeting, you can place an order for carry-out through the Internet and pick it up on your way. There are lots of benefits afforded to us by the modern ability to get what we want exactly when we want it—and there really aren’t too many downsides.

All of that being said, instant gratification turns out to effectually be little more than an investment in future regret. It’s hard for us to consider what we’ll need tomorrow when we can get everything we want today. For example, let’s say you know you’ll need a piece of equipment for a project due three months from now. You go online to see what’s available and you stumble upon a great deal. It’s too early to really know for sure if it’s what you’ll need, but you buy it anyway because it’s right in front of you. Then, two weeks later, you find out that it wasn’t what you needed at all. Just a little bit of patience could have saved you the additional expense.

When it comes to investing, I would argue that our contemporary acclamation to instant gratification has done much more harm than good. Intuitively, you would think that the more information we have at our fingertips, the better off we would be. However, because we human beings exhibit a bias toward information that is more immediate, that isn’t necessarily the case. The ability to open an app every hour to check the minor fluctuations in performance for our portfolios has little to offer us but anxiety. If we see too many declines in the short term, we may be tempted to sell prematurely—whereas if we accessed the same information only once per week, we may even see that the same portfolio we were so worried about declining across the span of two days actually improved across the span of seven.

Here’s the thing: in the short term, there tend to be large fluctuations in the market. But even following the most severe crashes, most stocks will eventually regain all of their losses. It is near-impossible for the stock market to experience a 100% loss, but 100% gains are perfectly ordinary. Given enough time, most portfolios will recover any losses and produce a modest return. It’s just the nature of the market.

You don’t need a fancy mobile app for your phone that monitors every movement of the market, and you don’t need a savvy financial advisor who’s always pushing you to do more trades. In the end, all you need is patience. If you need any help understanding how to develop patience as an investor, feel free to reach out to us for a complimentary consultation. The 24/7 stream of information can be overwhelming, and we want to help you wade through it all in order to remain focused on what really matters.