Why some people have been successful investors, to accumulate more money than others, really is not a mystery. The principal reasons for their good results have been luck, intelligence, an aggressive personality, but perhaps most important of all, patience.
According to the Oxford dictionary, patience is "the capacity for self-possessed waiting … tolerant perseverance." Most of those factors require little explanation. Luck plays an important part. One would have had difficulties if investing began at an inauspicious period, say in the late 1920s, or even in the 1940s. Also, an aggressive make-up implies a willingness to take chances.
What is essential then is the capacity to defer gratification – in other words, patient anticipation of a reward. Hence, nowadays, the more patience endured, the better the result. Knowledge and learned skills may have quick payoffs. Some investing does not yield a profit for years, but patience opens the door to better outcomes.
To test the validity of this argument researchers repeatedly have offered a group of adults the choice between receiving an amount of money immediately or waiting for some time and then obtaining a larger amount. After a lengthy period these researchers found that the longer gratification was delayed, the bigger rewards were forthcoming. They accumulated more money than those in this test group who had less patience.
Warren Buffet, considered to be just about the world’s most successful investor, had his wealth founded primarily on his long-term holding of Government Employees’ Insurance. It has multiplied many times over, and was a major contributor to his phenomenal fortune. The Kingdom of Saudi Arabia has had a "buy and hold" strategy in its portfolio, mainly real estate. The gains there have been enormous.
It has been well-nigh impossible to determine the course of the stock market or other investments over a short period of time. To a certain extent that is a form of casino gambling.
Longer term produces by far the best gains. Over the past few decades, investments in many well-known companies have been very significant. This columnist has held a major investment in gold for decades, ignoring the volatile ups and downs. Yet, the overall gains have justified that commitment. Still, there is one key condition. In certain periods gross overvaluations have meant that long-term investing is not the best course. We very well may be in that era now.
Nevertheless, in general one should realize that, rather than the lucky or smart investor, the patient one will be far ahead most of the time.
