Patience - The Most Powerful Investment Advice

While in Mammoth Lakes, CA getting in some spring time ski runs I started to ponder some of the investment advice I’ve received over the years. Advice like “Buy low and sell high”, or “Pigs get fat and hogs get slaughtered” are some of the phrases you hear over and over again.

Growing up in rural Minnesota in the 1970’s and 1980’s, there really wasn’t anyone from a financial standpoint to look up to that was living off their investments. Most folks worked hard for their company and sacrificed life for a promotion with higher pay and responsibility, and pensions were provided from those companies for people to live off in retirement. Those days are over!

My father had a friend that worked for the power company in Elk River, MN and always talked investment so my little ears perked right up when he was talking. He was so full of B.S. on so many subjects, told Ole and Lena jokes constantly, so you really had to wait for the nuggets. One day, after a long joke that I didn’t get, he said “Derek, the most important thing in investment is patience”.

Really?!? That’s how you got rich? I was probably 12 years old when he gave this advice. For decades I’ve thought about this, and why this would be his most important thing to convey to a young person as investment advice. I didn’t really get it but somehow this advice sank deep into my subconscious.

Buy Right and Hold

When you conjure up in your mind some visuals of professional investors on Wall Street you might imagine the stock trader, surrounded by computer screens full of red and green numbers and charts, and the “talking heads” with the latest stock tip on what’s hot and what’s not.

Or what does a professional real estate investor look like? Turn on HGTV and I’m sure there will be a “flipping show” that convinces everyone that you get in and get out of an investment in 90 days, make insane returns, and drive a Range Rover between your projects in a typical day.

These entertaining images are not investing. We call that speculation, or trading in my world. These speculators can get rich in income for as long as they stay on the “hamster wheel” but pay high taxes, pay enormous transaction fees, and upgrade their lifestyle according to their short term success.

Have you heard the story about the Qualcomm janitor? From what I understand he made minimum wage but received Qualcomm stock as part of his compensation. He didn’t pay any attention to his portfolio but continued accumulating stock, which turned in to a multi-million dollar portfolio by the time he retired. Well done!

Or maybe you’ve heard about heirs inheriting some old stock portfolio, long forgotten about and had no attention paid to it, that included a 100-bagger ($10,000 turns into $1,000,000), and became a fortune. Clearly no time or energy was spent achieving staggering returns that beats the socks off most hedge fund managers.

Aha!

Patience = Buy Right and Hold!

Buy the best companies and the best located real estate and do nothing! Don’t mistake trading and flipping for investing. Accumulate quality assets and slowly build your passive income. It sounds way too easy, but in investing less complication and trading activity is far more powerful.

So wait for it. Raise cash and be ready to purchase quality assets. The stock market makes absolutely no sense to me. Real estate sellers have not faced reality that interest rates have doubled in the last year. The bid/ask spread is wide in real estate, and a new market price is being established. The pendulum is swinging back to intrinsic value, but this may take some time so don’t be in a rush.

Needless to say I won’t be receiving any offers to create a HGTV program! Oh well, I’d rather be wealthy than famous.

Please smash the “like button” or leave me a comment if you found this information useful.

Best,

Derek

Derek Petersen

Chief Compounding Officer

Aviara Capital Investments

Disclaimer: I am a financial independence guy and a financial freedom hack. I am not a financial advisor, a CPA, or a broker of anything. I recommend discussing financial decisions and/or planning with the professionals.