Patience Is Your Biggest Investment Asset
One of my reader ask me what am I doing since market has gone down by more than -10% from early May, am I buying or selling ? My answer is "No" , I don’t do any major adjustment on my portfolio , except nimble a little bit here and there with the dividend I received. Basically, my war-chest remained same in term of percentage in my portfolio.
For me, I don’t think it is compelling for me to do major adjustment on my portfolio at this point of time , although the STI Index has corrected by more than -10%, but it sitting just at long term mean level.
I would rather wait patiently for better opportunities or Mr. Market to act irrationally. If market rebounded from here , I am also happy with my current holding which enjoy the uptrend , else I may just keep calm and collecting the dividend. J
Patience, and the ability to sit down and wait, is the primary trait that links all of the world's greatest investors. If you do not possess this trait, it might be best to avoid stocks altogether. Indeed, as Jesse Livermore once said:
“Throughout all my years of investing I've found that the big money was never made in the buying or the selling. The big money was made in the waiting.”
Unfortunately, the environment today has developed in such a way that works against patience. In other words, investors are constantly bombarded with information/ news in an attempt to get them to buy or sell a stock, everyone seems shouting “ hit the button”.
A vast amount of information is available to investors on daily basis. Fortunately, you only need to understand a small portion to be a successful investor, doesn’t necessary to act on every piece of news we received.
Diversify broadly, keep costs low, re-balance periodically and be patient which I strongly belief that patience is more important than being smarts.
Remember that in the long run, active investing is a zero-sum game (exclude cost). For every outperforming dollar there is a dollar that under-performs by the same amount. As a group, all investors share the market's return, some made more and some lost more , long term Index ETF holder may just enjoying the “Beta”.
If you may realize, I intentionally chose this as the sub-title of my blog , to always remind myself about the important of being patient in investing:
"The stock market is a device for transferring money from
the impatient to the patient " by Warren Buffet .