Principle 11: Be patient

W as there a time when you bought something in a rush, only to realize it’s broken and needs to be returned immediately for repair? Was there a time when you pulled out of an investment because you thought it was going down the drain, then the next day you found it had bounced back?Patience, indeed, is a virtue. Not everyone has discipline and composure when it comes to trading and investing money. We tend to have what award-winning financial analyst Andrew Stotz describes as “emotional firestorms” that can endanger our portfolio returns.If you are new to the world of investing, some serious patience needs to be exercised because the stock market is not always a sure place for winners. We have to realize that there’s no such thing as easy money.To make sure we’ll get the most out of our investments, Mr. Stotz, who is also a valuation expert and Bangkok-based adjunct professor in finance, wants us to remember that too much trading incurs unnecessary costs and mistakes in the long run.“More actions lead to costs and risks of making mistakes. Reduce actions and be patient,” Mr. Stotz advises. Bad market timing can have a substantial negative impact on long-term wealth.This piece of advice couldn’t come at a much better time. People these days, including myself, tend to rush things and hate waiting to see the fruits of their labor. We tend to move too fast for our own long-term good at times, forgetting the dividend paid by exercising patience in our lives.A student from a university in the countryside of Manila, Philippines asked Mr. Stotz this: “When do we let go of stocks that keep on falling down in value? When do we know it’s time to let go and sell as we sometimes hope it will someday, somehow, go back up again?” Mr. Stotz admits he does not have absolute answer to this question. An admirable trait of Mr. Stotz is that he does not pretend to know it all, and certainly not what will transpire in the future. No one can predict that, he says, even top-notch financial analysts like him. The key? For Mr. Stotz, it is still diversification that wins in the end.Danielle covered the three-day university tour of Andrew Stotz in the Philippines from October 2 to 4, 2014. She will discuss each of Andrew’s 12 investment principles from her perspective. All articles will be posted here on www.andrewstotz.com.
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