Patience is Not Only a Virtue ... It's Profitable

Some Good Advice from Berkshire Hathaway's Charlie Munger and Warren Buffett

Warren Buffett once said, “No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.” Yet, according to some sources, the average holding period for a common stock is only three years. Is it any wonder that investors statistically experience far worse results than the market as a whole when they are frequently buying and selling stocks? First, you can’t possibly anticipate market movements; second, the frictional expenses will eat into your principal, lowering your compound annual growth rate. As Charlie Munger, Vice Chairman of Berkshire Hathaway, advocated, it’s not difficult to build wealth if you just spend less than you earn, put the difference in a tax-advantaged account, and over time, the result will amount to something.

Through buy and hold investing, an average person with a regular salary, family, house, and car could do very, very well for themselves. Just stick to the basics and grow wealthy through discipline, patience, and risk management. Munger himself calls this, "Sit on your a**" investing because it only requires one decision - to buy into an excellent business, and simply avoid taking action for several decades provided the intrinsic value and competitive position of the firm remains unchanged.