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The First Characteristic All Investors Need To Have: Patience

There are three characteristics every investor needs to practice in order to create long-term wealth — we’re going to show you the first.

Most of us have made the mistake of selling stock too soon. I’m guilty of it. You’re probably guilty of it. Even Warren Buffett, the man who once said: “the stock market is a device for transferring money from the impatient to the patient” is guilty of it!

Why does patience matter so much?

A study by Putnam Investments showed the performance of $10,000 invested in the S&P 500 from 2005 – 2020.

  • Letting it sit and doing nothing returned $41,400
  • Missing the 10 best trading days returned $18,829
  • Missing the 20 best trading days returned $11,400 


“But what if I missed the worst trading days?” 
That’s a fair point, but this highlights the importance of patience when it comes to timing; if you sell, when do you get back in?

COVID-19 is a perfect example — if you sold investments in fear, you could have missed one of the best years for the stock market in the last decade. Newcomers tend to look at a loss in the last three months, rather than the gain in the last three years. It’s easy to jump ship on a stock in the short term. What’s difficult is holding on for 10 years or more for a potential multi-bagger.

Investing is like anything else — none of us become masters overnight. It can take years of practice to become a great stock-picker. But, defining your plan, personal goals, and doing the necessary research to familiarize yourself with the companies you invest in will reap the rewards in the long run.

Remember, investing is a marathon, not a sprint, so try not to get caught up in the short-term noise, and stick to your long-term strategy.

Want to learn about the other two characteristics? Enjoy a free snippet of our Fundamentals of StockPicking course by playing this video.

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