We’ve come to expect good instant results. You can get everything you want (well…almost) either instantly or within the hour thanks to the on-demand economy. And if you can’t get it, I’m sure Amazon will eventually make it happen, with one exception – investment returns.
On-demand returns don’t exist. Accept it.
Impatience has no place within investing. You have to wait for good returns.
Value investors must be strong and resilient, as well as independent-minded and sometimes contrary. You don’t become a value investor for the group hugs. Indeed, one can go long stretches of time with no positive reinforcement whatsoever. Unlike some other fields of endeavor, in investing you can do the same thing as yesterday but achieve completely different reported results. In the long run, the research and analysis you perform should overcome market forces; the fundamentals ultimately matter. But in the short run, markets can trump effort and insight. – Seth Klarman via Valuewalk
The difference between the great investors like Klarman and everyone else is a disciplined focus on a proven repeatable process (while reducing mistakes) over the long term.
The worst thing an investor can do is give up on their process because the market didn’t agree with their strategy this year. The market often disagrees. Klarman accepts this. He knows value investing works over time because it doesn’t work all the time.
Put another way, you don’t need great returns every time to get great returns over time. But to do that, you need to stay focused on the process regardless of the year to year results.
- You’re Obsessed with Outcomes. Here’s Why Attention to Process Pays Off. – B. Ritholtz
- How Stories Drive the Stock Market – R. Shiller
- ‘Tis the Season for Bold Prediction – GestaltU
- So You Want to Be a Stock Picker – S. Fearon
- Investing Pitfalls to Avoid – MicroCapClub
- Failure: A Checklist – M. Housel
- The Few Rule the Many: Power Laws in Market Returns – Investor Field Guide
- The Rise of the Artificially Intelligent Hedge Fund – Wired
- Silicon Valley’s $585 Billion Problem – Fortune
- Get Your Taxes Done Early and Save with TurboTax