Patience is a profitable virtue."The stock market is a device for transferring money from the impatient to the patient" ~ Warren Buffett
What a beautiful week it was in the world! The birds are hoarding in my part of the world. You can see them swarming in the tens of thousands gulping up the droppings left behind in the farmer's fields from this years harvest, just getting ready for the long migration South. NHL and NBA playoffs in September, who'd have ever thought it possible!
Everybody has their own investment style and philosophy, what works for them and what doesn't. Some people even manage to be successful with many different stock market methods. Myself, I have been happy with my track record of blue-chip value investing over the years, as well as dividend income investing, I have failed miserably at timing the market or share price movements in the short term, but my favourite and most profitable thing to do is to find very young companies(companies in the early stages of their growth that is) with a very promising future, and purchase when I believe there to be little to no risk. What I mean is very little chance of a long term loss of my investment, and a high probability of a major growth in my investment.
"You shouldn't own common stocks if a 50% decrease in their value in a short period of time would cause you acute distress." ~ Warren Buffett
Something I have learned from this style of investing, is it literally pays very well to play the long game. Since I am incredibly averse to risk, I have found that after the initial studying, sleuthing, investigating, discovery, and the intrinsic value calculations, the most import thing you can do for your investment is to add patience to it.
For clarity's sake, for me, risk is defined as the potential to lose some or all of my investment. For me, risk is NOT defined as beta, or volatility in the share price, and therefore volatility in the overall value of my investment account.
"No matter how great the talent or efforts, some things just take time. You can't produce a baby in one month by getting nine women pregnant." ~Warren Buffett
Why is patience so important? Don't we want our money now? Isn't this company going to make us millionaires? I've already got my house and car and vacation picked out if it would just go to $xxx.xx/share!!!! Patience is required because everything good takes planning and hard work, and those things takes time.
I always imagined that the best investors would be people who have experience growing orchards. First you find and obtain the best land to plant the trees. Then you find the best seeds that you can get and plant them in the best spots possible. You work the land with care and love. You get NOTHING back right away. Nothing except all of your investment is sitting out there in the dirt. Over the first few years, your seeds, if you take care of them well enough, establish roots. They turn into saplings. They build up resistance to the local environment's weather patterns, pests, and diseases. They're pruned them to encourage efficient growth. You remove any plants that don't show hope, and replant again in the same spot, making sure that the location is good, and it was just an unfortunate seed.
FINALLY, you begin to see fruit. Just a bit. It's not much, but you get to taste your apples for the first time. They taste so much better when you are the one who did all of the work to get them to that point. You take the fruit from the strongest looking trees, and start harvesting seed and replanting it in new space, and in spaces where failed plants once existed. The following year the orchard makes enough fruit to pay the years bills, and grow the orchard a bit. The year after it not only pays the bills and expands, but it also begins to pay you back what it owes you from your initial investments. Not much longer, and it is now paying you your initial investment, and growing the orchard, and covering all of it's maintenance costs every single year. What a reward!
A good business is no different. We find a good location('green' technology?), purchase the seed(find initial investment money), do the hard work of digging and planting(investigate companies and find ones that you believe will truly thrive). Now we plant the seeds(invest in companies and buy our shares), and add patience and see which ones build good roots and thrive in the conditions(hold), we remove and replant the ones that do terrible(hopefully that doesn't happen, but sometimes we can get a bad seed no matter how well we investigate it), and we let the trees begin to produce apples(profits!!!!). Each year the number of apples increases, and profits grow(Return on invested capital), and eventually the orchard provides for us a life income(now we get to live comfortably, and take back many multiplesof what we put in to our initial investment!).
No matter how wonderful a business is, it doesn't grow until the root system is established, and the plan(a good one) is executed. For some companies this happen faster than others, and for some the process is slower. If you do your investigations right, and have patience, you will thrive.
"Someone's sitting in the shade today because someone planted a tree a long time ago" ~ Warren Buffett
Sit back, relax, be patient. Thats all you need to do! Who cares what some low-baller is offering for your orchard today. You're not going to sell, because you don't see the orchard for what it is today, you see it for the apples it will have in the future.
No matter how fast the process happens, it will never feel like it's happening fast enough. After it happens, in hindsight, it will blow your mind how quickly your wealth grew.
How many apples does your investment have in it still yet to grow? Should you sell any of your orchard before you have lived off of the fruits of your labour? Whats stage is your company at right now?
You are a business owner of a company with a solid future. The future is bright, be patient.
Cheers!