Be Patient – Wait For The Opportunity

Warren Buffett is fond of comparing investing to baseball. “You don’t have just three strikes to get on base.  You can wait for that fat pitch..”

Warren Buffett is fond of comparing investing with baseball, his favorite sport.  He says there is no three-strike rule.  You can wait for that fat pitch.  This is one of the greatest rules I gleaned from reading what successful investors do.  There is a lot of motivation to push a button and buy something.  Lights, action, push! You’re the proud owner or short seller of equities.  Warren Buffett approaches investing very differently than modern age algorithmic investing with its rapid-fire buying and selling of stocks based on who knows what algorithms, front running trades, and inscrutable ETF trading.  Buffett is fond of saying imagine you had a punch card with 10 choices for your whole life. You could only buy 10 stocks.  What would you do then? Most likely you would wait for that fat pitch.

Patience sounds so simple but it’s one of the hardest traits for an investor to have.  It’s not just patience involved in waiting for that opportunity but patience is required when sitting on profits.  Perhaps that’s even harder to do.  I recall a story about a legendary futures trader that placed an enormous bet on soybeans. He had done his research and he was confident that beans would soar because of supply-demand imbalances. Futures have enormous leverage so small amounts of money can be turned into tidy sums. In this case, he was in the black and the trade was working very well but he felt that it would go much higher. The temptation to take profits was so great that he left the country for a remote destination where he knew he would not have access to a computer and phone and would be forced to sit on his growing fortune.

It’s easy to confuse patience with burying your head in the sand.  I’ve met people that think they have patience but they’ve confused that with the inability to make up their mind.  Yes, they can buy and hold but