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Here's Why Patience Is The Key To Successful Investing

CryptoWhale
CryptoWhale
What is common in the investment strategies of successful investors like Benjamin Graham, Warren Buffet, Christopher Davis, and many others?
They all recognize the extreme importance of being patient when investing. While this topic is often overlooked by the majority of traders who’d rather chase quick and uncalculated gambles, all successful investors know the true value in holding back temptations, and being patient. 
In this article, I’ll be provided a quick breakdown of why patience is a completely underrated, and necessary skill to have, then I’ll talk about how it’s helped me tremendously in my personal investments, and finally, I’ll provide some top tips to help you stay patient during market cycles. Enjoy!
Why Patience Is So Important
In today’s world of 24/7 news cycles, constantly changing sentiments, moon boy shills, and record-high levels of uncertainty, you would be dishonest if you said you’ve never once felt lost, confused, or emotional. 
At its worst, today’s financial media encourages investors to take excess action, which is actually one of the worst things one can do in investing. The most important principle in investing is not how savvy your trading chops are, but something quite the opposite: patience. 
Key Benefits of Being Patient:
  • Tax benefits: In almost all countries, the government rewards patience by having higher taxes on short-term capital gains as compared to long-term capital gains. Take advantage of it.
  • Reduces mistakes: Natural bias of humans is to act. So when we hear an idea about buying a new stock or cryptocurrency, we are more worried about what would happen if we don’t buy — we may miss a great opportunity (loss aversion bias). This causes investors to have too many assets in their portfolios. A few weeks/months later these same investors don’t have the slightest inkling of why those assets were bought in the first place, and, no idea what to do next with them. 
  • Develops conviction: A deep understanding of the token or company, it’s business model, and its ecosystem can help investors build strong convictions about the company. On-going diligence helps one understand how the company is reacting to various exogenous and endogenous events. With conviction, an investor can act decisively in either buying a meaningful chunk or leaving the asset alone. A strong conviction will allow an investor to hold on to a position when the market is in turmoil. However, building conviction requires patience and working through the tedious process that is investing.
How Patience Has Personally Helped Me
Patience is rewarding, and I’ve witnessed it dozens of times over the years.
When I first bought Bitcoin in 2013, when it was worth under $200, I safely stored a large stash of the cryptocurrency away for safekeeping. Over the years, my strong patience, and lack of desire to day-trade helped me survive the Mt. Gox Hack, which affected almost every Bitcoin trader during 2014.
This large stash has since grown exponentially in value and rewarded me nicely. I’ve since taken profits on my holdings due to market risks that are much too big to ignore, and I have absolutely zero regrets. Many other big crypto investors I’ve spoken with often refer back to their ability to remain patient as the main contributor to their portfolio.
I’ve also made a fortune with my long-term stock investments, including Apple, Microsoft, Amazon, Nike, and Best Buy, many of which have had some up and downs over the last 15+ years. By being patient, and looking at the long-term trend, I’ve managed to hold on tightly and only sell when they become evidently overvalued (when greed becomes excessive.)
When we discuss Patience, it doesn’t mean just buy into anything and hold onto it forever. You will never make money by doing that. You must also consider having an exit strategy, and only practice patience after you’ve done all your research on the investment.
For example, don’t go all-in on some random shit coin called “Spaghetti Token” and then decide to practice patient by holding it for years. This must be done with something that has a strong business model, utility, fundamentals, and a long-term growth factor.
Tips to Becoming More Patient With Your Investments
Being a patient investor might not be easy for you, as Warren Buffett’s business partner Charlie Munger points out. But there are tools to help you overcome impatience. 
Here are a few strategies you can use to cultivate patience and clarity of thought in your investing decisions:
  • Have a plan and think long-term. Set long-term financial goals and keep them front of mind during volatile times. A written financial plan is a great idea. Long-term thinking helps you mentally separate your investing journey from your long-term financial destination. Keeping a long-term perspective will give you the psychological fortitude you need to grow your portfolio over the long term. If you have trouble thinking about the long term during volatile times, consider using a trusted financial professional to help keep you on track. 
  • Understand that market volatility is normal. Just like lines at the grocery store checkout, market volatility is a normal part of life. It might still be unpleasant at the moment, but recognizing that you’ll encounter volatile markets from time to time can help you mentally prepare yourself.
  • Remember, time is on your side. Take solace in the long history of capital markets. Corrections are temporary and usually brief, and even bear markets eventually end. Historically, markets go up far more often and by a much greater margin than they go down. Owning assets for the long term, assuming they are high quality, and you didn’t buy the peak, is one of the best ways to profit from economic progress, innovation, and compound growth.
  • Don’t look at market prices too often: Looking at market prices often, causes us to expend a lot of emotional energy on either elation or dejection. Warren Buffet’s famous dictum should always be remembered, “ The market is there to serve you, not instruct you.”
  • Control Your Emotions. Buy Low, Sell High: Patience will be extremely hard to practice if you FOMO into the peak of a bull market, and plan to “hold it” for the next 2–3 year bear market. Once you’ve stopped yourself from making irrational investment decisions based on greed or fear, you’ll find being patient much easier. 
And finally, being patient isn’t just something you do during bull markets. Patience can actually be rewarded much more during bear markets, where sometimes investors will decrease their position sizing, wait patiently, and start accumulating only after we’ve reached undervalued ranges.
“Trading is 90% Patience and 10% Execution, so spend most of your time getting better at being patient. Think like a hunter, not a gambler.”
Thanks for reading! As with all my content, my goal is to always provide educational and insightful articles. I hope this could be beneficial to you!
Have a wonderful day everyone! 
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