Great Stock Investors Know That Patience Pays Off! 

Published by Linda Brown on

Great stock investors know that patience is a key advantage when investing in the stock market!  Following is a quote from Warren Buffett, one of the greatest investors of all time:  “The Stock Market is designed to transfer money from the Active to the Patient.”

The investment “greats” know not to panic and sell during “market corrections” or “bear markets.”  A market correction is a decline in the main market indexes (the S&P 500 & the Dow) of at least 10% from their highs.  A bear market is a 20% decline, from these major indexes over a two-month period. 

Market corrections and bear markets are “temporary” declines in the stock market!  Too many investors panic and sell their stocks prematurely and, many times, only watch them go up again after selling! Wise investors do not panic during these downturns.  Instead, they know that this is a great time to buy stocks “on sale!”  Intelligent investors make sure they have cash set aside and load up on stocks of bargain companies at these great prices

However,  many investors panic and sell their stocks “prematurely” in declining markets.  Their fear and emotions take over.  Unfortunately, after selling many investors will see their stocks rise again in value after the decline is over!  Many investors lose money this way!  Don’t panic and make this mistake!  Try not to let short-term market swings discourage you. 

Exercising patience pays off in the stock market!  “Slow and steady” works great when investing in stocks!  The stock market places great emphasis on a company’s quarterly earnings.  However, it is to the investor’s advantage to invest long-term and think of their stocks in terms of decades and not just quarters. Remember:  “Patience is truly a virtue when investing in stocks!”

Moreover, great investors know that employing patience, and investing long-term, will allow them to take the special “lower” capital gains tax rate!   This tax rate can be used when an investor holds their stocks for more than a year.  There is no tax due on your gains until you choose to take them.

If an investor sells their stocks in “less” than a year it is considered a “short-term” capital gain.  This type of gain is taxed at an investor’s “normal” tax rate!  This could prove very costly, especially, if an investor is in a high tax bracket!

Great investors know that exercising patience allows them the miracle of compound interest.  Compound interest is basically earning “interest on interest.”  It gives the investor more return on their earnings especially when they invest long-term!  In addition, an investor that holds onto their stocks long-term allows their dividends to grow.  

Wise investors exercise patience and discipline with their stock portfolios!  Many do not monitor their stock portfolios on a constant basis. This habit could entice an investor to sell earlier than necessary. After careful research, great investors stick to their convictions   Once they choose their companies they leave their stocks alone.  Great investors are well aware of the advantages of investing long-term.  

Great investors exercise patience when they don’t constantly buy and sell stocks.  They know this is not a winning strategy!  Investing this way could put the investor in the position of being a “day trader” (selling and buying on the same day to take advantage of small moves). Unlike, long-term investing, day trading is, in essence, speculating!  This activity could prove to be very “costly” for the investor in brokerage fees and returns! 

In conclusion, great investors know to apply patience to reap the maximum rewards that long-term investing offers!  These wise investors, also, do not panic and sell when there is a decline in the stock market.  Instead, they exercise patience, and the required discipline, and see it as an opportunity to buy their stocks “on sale!”  

Moreover, exercising patience and investing long-term also provides investors with tax advantages!  In addition, patience when investing also provides investors with the benefit of compound interest and growing dividends!  Hence, a “key” advantage for an investor in stocks is patience!

Linda Brown

I'm an Accountant, Blogger & Investment Consultant with a "Bachelor of Business Administration"degree. Teaching women how to invest in stocks successfully! Men welcome!