Patience is key when it comes to investing. Studies have shown that some stocks can make investors millionaires if they have had the patience to ignore the day-to-day fluctuations of the market and own stocks for decades.
Value investing superstar Warren Buffett has much to say on the topic of patience. He has been quoted as saying "the stock market is a device for transferring money from the impatient to the patient."
When you first start investing, it can be difficult not to go in and check how much money you have made. If you’re starting small, that first rush of realising that you’ve made more with your investments than you would have had the money just sat in a savings account is a real rush. But the idea is to play it cool, and not check.
But, to get to the point where you’re that confident, and that patient, you need to have done your research. The idea is to make informed and well-researched decisions through fundamental and technical analysis on the long-term viability of a stock, as well as its potential to grow.
A lot of an investor or analyst’s anxieties about being patient when it comes to investing is managing timing. Some self-directed investors exit at the first sign of trouble, which means they can miss out once the stocks correct themselves and reach new highs. This impatience, and of course eagerness, can lead investors into psychological traps because most investors take cues from past market trends instead of attempting to anticipate potential market moves.
But herein lies the perilous road for non-institutional investors who cannot afford the big punches the market can sometimes throw our way. How late is too late, and how early is too early? It’s a personal choice dictated by personal risk aversion as well as how much money one can stand to lose, or hope to gain.
Here at Upside, we’re not here to give advice, but we are here to develop your research skills and abilities. We want to help our users skill up. We’re in the business of helping you become more accurate and confident in the investment predictions you make. Playing it cool like Danny Zuko.
With accuracy and confidence comes patience - it’s not quite as catchy as the Spiderman quote, but Upside doesn't wear a cape, so…