The fact that there is no quick fix or easy path to successful investing is one of the biggest obstacles that all investors must overcome. The tortoise and the hare fable by Aesop is a helpful metaphor. Utilising the time on your side, which may span several decades, is necessary to successfully but frequently slowly seize the market returns. Market results might be disappointing in the short run. The longer you can hold out, the more probable it is that the returns you get will be, at the very least, bearable and, ideally, far more appetizing. Small gains can eventually compound into significant changes in the patient investor’s outcome. In actuality, markets fluctuate monotonously regularly.

“The stock market is a device for transferring money from the impatient to the patient.”

– Warren Buffett

 

To be a successful investor, you must have patience. You will go backwards, recover from the setback, and then surge forward again on your investing journey—typically in brief, rapid bursts of upward market action. All you have to do is persevere. Keep in mind that to profit from the markets, you must be present. Impatient investors typically lose faith in their investments too soon, which can have unpleasant outcomes.

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.”

– Benjamin Graham

 

The following chart is a potent illustration of the advantages that patient investors will experience from convergence towards stock market expectations.

Figure 1: Converging stock market outcomes as the holding period increases, Jul-1926 to Jul-2024.

Source: Albion Strategic Consulting. Periods on an annualised, monthly rolling basis. Omits ‘Best return’ outcomes for 1 year to May-33 and Jun-33 due to axis limitation. See endnote for details on data used.