Throwback Thursday: How Do I Practice Patience in the Stock Market?

Value Investing Journey is dedicated to developing the world’s best value investors. In that vein, I occasionally answer questions related to value investing, finance, learning, mental models, etc., on crowdsourcing site, Quora. I hope you enjoy the question above and answer below.

Below is an answer I wrote on Quora to the above question. The question and answer are important to how we all learn our craft of value investing so I’ve decided to post it here as well.

If you’d like to follow my other value investing, finance, and other answers on Quora – answers that have now been viewed more than 110,000 times – you can do so here.

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How Do I Practice Patience in the Stock Market?

If you’re tempted to buy and sell a lot in the stock market, and don’t know what to do, studying investment icons like Warren Buffett is a great thing to do.

While I can’t tell you exactly what Buffett does on a daily basis to alleviate the urge to buy and sell, I can tell you what helps me when I face the same situation.

Before we get to that, I need to tell you what three things forced me to learn extreme patience.

For the better part of the last 13 years, I’ve dealt with severe health issues.

When I was at my worst, years ago; I could literally do nothing but lie around all day in bed and watch TV because I felt so bad.

This went on for years and a lot of it was because I kept pushing myself to get better even though at the time there was nothing I could do to force myself to do so.

I don’t recommend this course to learn patience for anyone.

The second major thing that forced me to learn extreme patience was getting my ass kicked by Mr. Market after I started investing real money.

At this point, I’d learned about investing for a number of years and felt ready to begin investing real money.

Unfortunately, I would do zero due diligence on companies, and I’d only invest in companies with “good looking” ratios. Most of the time, I didn’t even know what the company’s operations were; scary right?

Well a few months after I began investing real money, Mr. Market decided to crush me and within a matter of months my portfolio was already down 50%. Luckily, I only invested a total of $500 at the time but this was still a rude awakening.

After this, I realized I had to either stop investing completely or I’d lose all my money. Or I needed to take the time to learn the ins and outs of business and company analysis and valuation.

This taught me a great life long lasting lesson, but again it’s not something I recommend forcing on yourself.

The third major thing that forced patience upon me was my kids.

Have you ever had someone – specifically a smaller version of yourself – ask you the same question 30 times in one day, the exact same way, all the while whining because “Daddy you didn’t answer my question, can you tell me again? One more time please?”

These three things forced me to learn extreme patience. I knew if I didn’t, my health would continue to deteriorate, Mr. Market would keep kicking my ass, and my daughters would drive me crazy.

As market levels continue to rise, it’s become harder and harder to find great undervalued companies that fit my ultra strict criteria for investment.

But I still want to be productive during these times so what do I do to keep myself occupied and my mind from drifting into thoughts of buying something?

Below is a list of some of the things I do to remain productive while also keeping my mind off buying companies when I haven’t in a while.

• Read
• Start businesses
• Raise capital for my investment firm
• Work on expanding my businesses
• Wrote a full length value investment education book I published on Amazon
• I’m now working on a second edition of this book
• Started an investment newsletter
• Wrote a 60-page book I released for free to my subscribers detailing investment float
• Write blog posts
• Help train and educate other value investors
• Expand my circle of competence into more industries
• Go fishing
• Take a walk
• Learn new skills – two recent examples are taking the time to get my real estate license for business expansion and opportunity purposes, and also learning more about sales
• Helping others
• Consulting on projects
• Meet, talk with, and expand my connections
• Etc.

UPDATED NOTE ON THE ABOVE LIST ***

I’d now add the following to the above list:

• Learned marketing
• Turned the On Float series into an 87-page paperback book
• Built multiple courses that teach others how to value invest
• Gotten $10,000 Coaching Clients teaching them value investing
• Gone after acquisitions totaling more than $40 million
• And more…

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Is this a perfect system, of course not but it keeps my mind off searching for and buying new companies which keeps me from making more mistakes, while it also helps me remaining productive and allows me to continue working towards my goals.

The longest I’ve gone between one buy to the next so far – now 10 years into my career – is 18 – 24 months, so this process works well for me. ANOTHER UPDATED NOTE HERE *** I now haven’t bought anything new in almost 3.5 years.

To become a great investor you need to learn extreme patience. You’re on the right path just by asking this question, and I hope this answer helps.

If not, you can always let Mr. Market kick your ass and give you a 50% loss within months of starting like I did. Or you can hang out with my kids for a few days if you’d like. Both of these will force patience upon you :).

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What would you add to the above list from your personal experience? Let me know in the comments below.

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