Warren Buffet has built a successful investing career on the bedrock of patience. His insights into the power of a long-term mindset have become the centerpiece of modern investment strategy.
At 24/7 Wall St., we have spent over 15 years following Buffett’s every move, analyzing Berkshire Hathaway’s strategies, and distilling his wisdom for our readers. We’ll take an extra-close look at one particular part of his investment philosophy today: patience.
Of course, patience isn’t just relevant to the stock market. It’s also important for career success, developing strong relationships, and growing. Many of Warren Buffett’s quotes apply just as easily to daily life as they do to investing.
Here’s a rundown of the key points we’ve learned from Warren Buffett:
- Patience is the key to successful investing. It’s essential to have a long-term perspective and develop enough discipline to avoid impulsive decisions. Otherwise, it’s very easy to simply follow the crowd.
- Patience applies to all areas of life, too. You’ll need patience to achieve your career goals or build strong relationships. Success is linear; it builds on previous success. This stacking takes time.
- Prioritize quality over short-term gains. You should choose strong companies to invest in, even if they aren’t on the first page of the news. At the same time, cultivating steady progress at work and at home leads to the biggest gains.
- Dividend stocks, in particular, provide benefits when the investor has plenty of patience. Of course, picking the right dividend stocks is also important. Take a look at our free report on “2 Dividend Legends To Hold Forever” for our recommendations.
Why Are We Covering This?
At 24/7 Wall St., we cover Warren Buffett and investing a lot. We’ve covered Buffett’s company, Berkshire Hathaway, for over 15 years. It only makes sense that we’d look at what Buffett has said about patience, which is a key trait of investing.
1. The Stock Market is a Device for Transferring Money from the Impatient to the Patient
This famous Warren Buffett quote is all about patience and the stock market. The stock market is exceptionally volatile. That’s just how it works! Prices can fluctuate dramatically very quickly, but that doesn’t mean that you should buy and sell quickly! It’s important to remain patient and ride out these fluctuations, benefiting from the market’s long-term upward trend.
Patience also allows compounding interest to work its magic. Even modest returns can generate substantial wealth over the long term. This is especially true if you reinvest dividends and avoid pulling money out.
Patience in Relationships
Building strong, lasting relationships requires patience. Completely understanding another person takes time, and impatience is the fastest way to misunderstandings.
Achieving basically any goal in life also requires a long-term commitment. Patience is an essential skill for navigating career goals, for instance. Success doesn’t come overnight, and patience can help you keep working towards your goals even when the reward is far off.
In essence, patience is a huge virtue that can yield huge rewards. However, cultivating it is often easier said than done.
2. Successful investing takes time, discipline, and patience.
For this Buffett quote, it really helps to read the whole thing in context: “Successful investing takes time, discipline, and patience. 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.”
This quote, again, emphasizes the importance of a long-term mindset. You aren’t going to become successful overnight, even if you’re the most talented investor around. Quick profits might be tempting, but sustainable wealth is built over the long term.
Sticking to a long-term plan requires patience and discipline, though. It’s easy to try to take shortcuts, especially when it seems like everyone else is doing the same thing. You must be willing to wait for investments to play out, even when the market takes a dive.
Discipline, Patience, and Goals
You can’t accomplish anything overnight, even beyond investing. Just like you cannot make a baby in a month, you can’t accomplish practically any goal in a month. Building a successful career, raising children, or achieving financial goals are all accomplishments that take time.
You aren’t going to teach your 7-year-old algebra overnight, but you can take baby steps to get them there in a few years.
3. If You Aren’t Willing to Own a Stock for 10 Years, Don’t Even Think About Owning It for 10 Minutes.
You should aim to invest almost entirely long-term. When you’re looking for a new investment, you should focus on the underlying business rather than short-term fluctuations. This long-term perspective prevents you from making impulse decisions based on emotion.
Short-term trading often involves high transaction costs and can be detrimental to long-term returns. Focusing on companies you believe in for the long haul can reduce the temptation to trade excessively.
True quality investments come from owning great businesses that you believe in.
Dedication Leads to Mastery
No matter what you’re doing, you should have a long-term view. Whether you’re learning a new skill or pursuing a new hobby, you must consider where that will take you in the long term. Where do you want to be years from now?
Without dedication to these long-term horizons, reaching mastery is challenging, if not impossible!
Building strong relationships requires the same amount of dedication. You must commit to having the relationship’s long-term viability in mind, not making short-term decisions that could damage the relationship.
Short-term gratification is tempting in all areas of life, but sustainable success requires patience and persistence.
4. Only Buy Something that You’d be Perfectly Happy to Hold if the Market Shut Down for 10 Years.
This quote goes hand-in-hand with the previous one, but it’s a bit more dramatic. You should consider that each commitment you make is forever. While the sell button is always there, it isn’t an undo button. Using it as such only puts your money at risk.
Instead of focusing on market fluctuations, you should look for companies you want to own forever. Take time to look at the company’s financials and choose a company you really believe in, not one driven by greed.
Purchasing Decisions
This mindset works great when you’re purchasing anything, not just stocks. Before making a significant purchase, you should consider if you’ll still be happy with it years in the future. Is it something that you imagine being a vital part of your life five years from now? If not, it may not be something you need to buy.
This consideration helps you avoid impulse buys and wasteful spending.
5. I’m a Better Investor Because I’m a Businessman
Successful investing requires resisting the urge to react impulsively to market fluctuations. Patience is all about maintaining emotional control. You don’t want to let your emotions make choices for you.
Great investment opportunities often require patience to identify. By avoiding impulsive decisions, investors increase their chances of finding truly exceptional investments.
Using Patience to Become a Better Person
While patience can help you become a better investor, it can also help you become a better person. Patience is vital for overcoming setbacks when pursuing a personal goal. Success is linear. Your next success will build on previous success. All of that takes time.
Taking shortcuts when it comes to any of your goals is a bad idea, even if it looks like everyone else is taking that shortcut, too. Instead of helping you get ahead, these shortcuts often prop you up on unstable foundations or, worse, get you lost entirely.
6. Time is the Friend of the Wonderful Company, the Enemy of the Mediocre
The best companies succeed more as time goes on. These are exactly the kinds of companies you want to invest in. They compound their earnings and market share as the years wear on. In this way, they reward the patience of their investors.
Mediocre companies may appear cheap in the short term, or their stock may even pop occasionally. However, they’ll fail to deliver long-term returns.
If you chase short-term gains, your odds of investing in a mediocre company are higher. It’s important to avoid these “value traps.”
The Benefit of Time
If you play your cards right, you can make time your friend, not your enemy. For instance, strong relationships are built on trust and shared experiences, which both develop over time. Career progression also requires a long timeframe. Those who work with time can use it to compound their success.
Time amplifies the quality of both people and companies. If you set up the qualities you want to amplify now, you can enjoy the natural growth overtime.
None of us like the idea of growing older, but that doesn’t mean we have to ignore the benefits of time marching on. In fact, Warren Buffet has quite a few famous quotes on aging, too.
7. The Trick in Investing is Just to Sit There and Watch Pitch After Pitch Go by and Wait for the One Right in Your Sweet Spot.
Pursuing home runs may seem like the best thing to do. However, it can be extremely risky. These high-reward stocks are often also high-risk, which can lead to massive losses. Instead, you should aim for a more conservative approach, like hitting singles. This strategy can lead to more consistent returns over time.
Even small, consistent gains can compound significantly over time, leading to more wealth than short-term gains. However, this strategy does require a lot of patience. If you’re looking to get-rich-quick, you’ll be disappointed with compound interest.
Steady Progression
Steady progress is the name of the game in many areas of life. For instance, steady learning can lead to career success. It’s important not to chase unrealistic goals or jump for a promotion you aren’t ready for yet. Instead, small, consistent improvements can be the most rewarding option.
Consistent healthy habits, like regular exercise and a balanced diet, also have a bigger impact on your long-term well-being than short-term health goals, like dieting. Work on habits you can continue doing for the rest of your life.
8. Risk Comes From Not Knowing What You’re Doing.
Knowledge is power, but knowledge isn’t gained overnight. Before investing in a company, you should take the time to really look at it. Understanding how the company works and how it’s doing takes time and effort. It’s important not to jump the gun and invest in a company before you’ve had time to do the research.
Sometimes, you’ll spend hours researching a company and discover that you really don’t want to invest in them after all. That’s okay! Don’t consider it time wasted. Consider it a poor opportunity you luckily missed.
Patient Decision Making
Just like you should take the time to research any company you’re interested in, you should also take the time to research any decision you need to make in your life. Making informed decisions means learning how much you absolutely can about the topic and its potential consequences. You should avoid rushing into a decision without the proper knowledge.
However, that doesn’t mean you can sit around and never make a decision in the name of more research. It’s important to realize that researching more isn’t going to help you make a better decision. There is a point when more research doesn’t add much.
9. It’s Far Better to Buy a Wonderful Company at a Fair Price Than a Fair Company at a Wonderful Price
Even if you’re as patient as possible, it only pays off if you invest in the right companies to begin with. You should prioritize investing in companies with strong competitive advantages and sustainable growth prospects. While price is a factor, the quality of the underlying business is arguably more important.
Finding wonderful companies at a fair price is the first step to a long-term investment strategy. You may also have to wait until a good company becomes available. You may want several companies for a while until you feel confident investing in them.
The important thing is to avoid going after the “next big thing.”
Wonderful Companies and Fair Prices
This insight doesn’t just cover investing, though. You can use the concept of companies and prices to make other decisions, too. For instance, you may find working at a wonderful company is a better decision than simply going to the company with the best salary.
Building strong relationships often works better when choosing people with similar values and life goals. Relationships solely based on superficial qualities may work great in the short term, but they tend to flounder over time.
When you’re purchasing anything, you should apply this logic, too. For instance, investing in high-quality products that last often works better than purchasing cheaper items. While you might pay more upfront, you’ll pay less in the long run.
10. The Most Important Quality for an Investor is Temperament, Not Intellect
You’d imagine that the best investors are the smartest, but that isn’t what Buffett believes. Instead, he says that temperament is far more important for investment success than knowledge alone. Managing fear and greed is essential to making good investment decisions.
A calm, patient temperament allows investors to maintain a long-term focus, avoiding impulsive actions caused by short-term market fluctuations.
Strong investors must also rely on their own judgments and ideas, not lean exclusively on the ideas and emotions of the crowd.
Emotional Intelligence and Success
It’s no longer a secret that emotional intelligence is more important to success than intellect. Those who are able to control their emotions and make more informed decisions are also those who tend to do their best inside and outside the workplace.
Emotional intelligence tends to make individuals perform best under stress. When you can control your fear and take a step back, functioning under stress is much easier.
Emotional intelligence also makes individuals better at communicating and empathy. In the end, that also makes building relationships easier. When you have a better understanding of your emotions and others, reacting properly in different social situations is much easier!
Luckily, you can cultivate the temperament that you want! While temperament is partially innate, it’s also learned. Your habits make up your temperament, and your habits are changeable.
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