Why You Need Patience

How often have you heard, they have the patience of a saint?

 

Well, when it comes to investing that is exactly what you need and more.

 

I often see people chasing the money.  They have read that this is the next best thing and move their money from it’s current investment into the new hot pick.  The problem is by the time they have heard about the “hot tip” so has everyone else.  The price shoots up, higher and higher until there is no more profit within the asset. Still people want to buy in because it will definitely go up even more.  They are fraught with worry and disillusion when the price drops the next day and they lose heaps of money.

 

The only person who makes from the investment is the one who bought it when others didn’t want to.  They held it for a long time patiently waiting for the price to go up.  Then when the “hot tip” goes out they are the ones selling and reaping the rewards.

As an investor, I follow the money.  Not looking to invest in the next “hot tip” but watching where the money is moving from and which investment asset is out of favour. I know, that the asset can be bought fairly cheaply, often below market value as the seller just wants the money to move into the next “hot tip”.  

 

My job then as an investor, is to sit back, relax, watch the markets and wait for the asset to go up in value.  Then sell and make my profits.

 

Sometimes, you have to wait a long time for the investment to go up.

 

All investments have an investment cycle.  The cycle when things go up and things go down.  Your job as an investor is to buy low. Hold and wait for the cycle to go up.  Oh, how great it would be to have a crystal ball and be able to see into the future.  Unfortunately, we don’t.  We wait.  Watch how the money flows.  Watch for opportunities and then take advantage of them.

 

Some of my investments are 20 years old and just coming to their peak.  Others are 5 days old and reached a peak.

 

Determining when to sell and take your profit comes down to being detached from the investment.  Watching the market prices and being ready to move at the opportune time.

 

If you are greedy, trying to get as much as possible then chances are you will miss out on the top prices.  Generally, greed makes you miss the opportune time to sell as you are trying to squeeze that little extra out of the investment.  The markets can change very quickly. So, while you were trying to squeeze that extra little in price the investment upward trend has ended.  Prices are dropping and the opportunity has been lost.

 

Learn to identify in/out markers, put an exit strategy or a buy in strategy in place, then sit back, relax, and patiently wait for the markets to change and the profit to come your way.