Investing in value is not the same as being a value investor. The difference is patience, which – not surprisingly – is a rather rare and infrequent quality in human beings. Because people naturally want results and they want them now. Very few people have the ability to make the sacrifice of waiting a part of their lives as investors. This is only with reach of those who understand that everything in life is ruined by impatience and that everything worthwhile around us was achieved gradually, thanks to the decisive influence of time.
In value investing, patience is essential at every turn, every step of the way. There’s no room for haste when making an in-depth, thorough and rigorous analysis of a company in order to determine its real value.
Once we’ve found the right company, we need to wait a little longer for the right time to buy, when the price guarantees a sufficient margin of safety. And, finally, once we’ve made our investment, we need to wait again for the market to recognise the true value of the company in the price.
And how do we learn to be patient? If we let it, our life experience is constantly teaching us patience, because time and time again it makes us wait if we want to create something truly valuable.
Knowledge makes us patient
We must be patient if we want to be parents or see a tree grow, build a house or create a family, if we want to strengthen a romantic relationship or friendship or develop a career.
Knowledge also makes us patient. Value investors are patient when they know what they’re doing, why they’re doing it and how long it will take for their investment to show a return. This in-depth knowledge gives us the necessary reassurance to stay the course and bide our time calmly and confidently for as long as it takes.
And, finally, a full, active and rewarding personal life also teaches us patience. That way we’re not tempted to obsessively monitor our investments and act out of worry, making unnecessary changes before the plan bears fruit and before time has had a chance to do its work, thus spoiling a great long-term investment by being too impatient.
