If you are even remotely sharp in the eye department, you will have noticed that this is Part 2. If you haven’t read Part 1 yet, you can find it here:
In Part 1 I was partly going on about where my own reserves of Patience come from and I am pretty sure being a Paraplegic Wheelchair User forces immense Patience upon me. I wasn’t going to say any more on the subject but if you follow me on the Tweets then you might have noticed that I have been doing some Sanding and Painting work on my BMW Z3 to sort out some rusty Aluminium on the leading edge of the Hood - anyway, I have to tell you this because it’s a great example of where Patience is drummed into me and also it is ironically quite funny !! (in a Sod’s Law kind of manner).
Earlier this afternoon I decided to try and get the job finished and it was really a case of just touching up some bits where I had not covered all the Red Primer stuff and there were some bits I had missed where I needed to put the Primer on and let it dry and then do the Topcoat. Anyway, it should have been a fairly straightforward thing despite the extremely hot weather but it was annoyingly complicated when I went out to the Car and picked up the Roll of Masking Tape only to drop it and see it roll under my other Car !! Of course, it can’t just roll a little way under so I can easily reach down and get it - oh, no, it has to roll to exactly the half way point under my Seat Leon so there is just no way I can get it. Why can it never just roll the whole way underneath the Car so it pops out the other side? So infuriating !!
I nearly exploded in utter intense frustration but I did the classic thing of checking myself and taking some Deep Breaths and then focusing my Mind on how I could fix the problem. It was extremely annoying but the simple solution was to go back to my House and get a Long Stick thing (I think in a former life it was a Pea Stick) and use that to sweep under the Car and knock the darned Masking Tape out from underneath.
But it did get me thinking. The lesson from this is that some things are simply beyond our control and there is no point getting upset and Emotional about it. Accept that the Problem has occurred (take some Deep Breaths if you need to but above all keep your calm), and then focus your Brain Power on how to fix the problem. It is irritating and frustrating but getting all Emotional doesn’t help at all and if you apply this Thinking to how you approach the Markets it will definitely be a much more positive and helpful frame of mind. This kind of thinking helps build Resilience and Persistence - two Character Attributes which will really help with Investing and Trading. Never give up and have a stubborn belligerence to beat the Markets at their own often immensely perverse game.
Lots of things happen in the Markets which are entirely beyond your Control - if you can’t shrug your Shoulders and put your effort into seeing how to minimise or eradicate the Problem or avoid it getting worse, then perhaps you need a Rethink on your Approach. For example, if a Stock you have is falling and it is grating on your nerves, there is no point Panicking and doing something rash and stupid. Take your time, go back to basics, why did you buy the Stock in the first place? Does it still represent Value on the criteria that you use? Is it just a natural Pullback in a lazy Summer Market (probably !!). If you cannot take such moves in your stride and just shrug them off then perhaps you need a more Rules-based System such as using Stoplosses; using such an Approach makes the Decision to Sell automatic and removes the Emotion - you set a Stoploss Level when Opening the Position and if it hits your Stoploss you should just Sell it with no Emotion and take the Loss and move on.
If you do not use Stoplosses and get all stressed out and worried on even small moves downwards on your Stocks, then perhaps your Portfolio is too Concentrated and you need to have more Positions so that a Weak Stock does not impact your Overall Returns too much. You will sleep a lot better.
And another highly important concept is to remember the clear distinction between Price and Value - keep your Brain focused on the latter and let the Market throw the Price around however the hell it likes but just use such Price moves as an Opportunity to Buy more or Sell some or whatever you want to do - but don’t let Price moves affect your Emotions and lead you into doing dumb things - see my Blog about ‘Price Vs. Value’ (there is a Link at the bottom of this Blog).
Particular Instances where a High Level of Patience is a big help
When you boil it all down, Patience really comes into its own for 2 particular types of Decisions:
The Critical Role of Patience in difficult Markets
I wasn’t going to add this bit but I thought that it was worth chucking in. At the time of writing this Blog it is early July and we are having Glorious Sunny Weather and it is The World Cup and Wimbledon - so Markets are very dull and volumes are low. In Market conditions like this it does get very tedious and for me personally it feels like I have had Weeks and Weeks of a slowly falling Portfolio (‘Death by a Thousand Cuts’). This is a Classic Turgid Market where Patience is essential. It is no good getting all Worried and biting your Fingernails and all that - the key here is to be Patient and to take a step back and to think about The Big Picture.
For myself I know I can do this Stockmarket Investing malarkey - I have had nearly 20 Years of experience and that is plenty of time to know I can cope with pretty much anything the Markets rudely throw my way - and it is this kind of rationalisation and thinking about ‘The Big Picture’ that helps me stay calm and Patient and to just ride it out. I know what I am doing, I have proved that many a time, I just need to stick to my Rules and stick to my proven and established Approach and things will come back my way.
Markets go up and down all the time - it is what they do and I have no Control over this - but I can Control how I react to the Markets and how I deal with them and it is better to put my careful Rational Brain Energy into thinking about these aspects than to get all Emotional and Panicky and stressed out.
One thing that helps me immensely in this is that I often run Scenarios in my Brain when I am out Painting the Car or digging the Garden !! Things like what would I do if the overall Stockmarket fell 10%? How would I react? What would I use to Hedge my Portfolio and when would I place a Trade on and in what size? What Cash have I got available to buy Bargains if we do get a big Drop? These sorts of things.
Another Top Tip of course is to forget about the Markets and turn off your Fone and your Laptop etc. and grab that copy of the Book by some or other Investing Legend you have been meaning to read for years and head out to your Garden or a Local Park or somewhere calm and pleasant and go and do something useful and direct your Brain to that task. Stop stressing about the Markets and go and do some useful Learning and/or Research or whatever.
The real bottom line here is to be Patient and stick to your own established Approach and to wait for the Markets to improve. They will, it is part of a normal Cycle. See The Big Picture.
That’s about it really. I hope this Blog has made Readers think about the importance of Patience and their own levels of this critical resource/skill. If you are impatient it probably does not help your Investing Activities and it is a huge failing to be trying to always do something and to be really active - Investment should be a very relaxed and leisurely business.
I take the view that the ability to exploit our in-built reserves of Patience and to train ourselves to be more Patient is a very under-appreciated ‘Skill’ and the big irony is that of all the various attributes an Investor needs this is perhaps one that anyone should be able to attain if they apply their thinking to it. I often talk about the concept of having an ‘Edge’ as an Investor and I see the ability to use Patience to our benefit is a real example of an Edge and really anyone should be able to do it. A lot of it is recognising its importance in the first place and then working on becoming more relaxed and more willing to ‘go with the flow’. Maybe yoga and all that is the way to go !! (it’s a stress relieving kind of exercise I understand, not a fruit flavoured Dessert….)
In terms of our Portfolios I think that having a Diverse and Mixed Portfolio of Quality Stocks lends itself to a Patient and relaxed approach to Investing and interacting with the Markets. Buying Junky AIM Stocks like you find in the WheelieBin needs attention and focus and will no doubt test your Patience beyond the limits of Human Endurance !!
If you are someone who works Full Time and has lots of other stuff going on in your Life then the ability to exploit your reserves of Patience when it comes to your Stocks is clearly a big advantage and this is similar for me where Investing is just part of my Life and I have lots of other things I have to do and others I enjoy doing etc.
Stay calm and take your time, there is no need to rush.
This one is about having an ‘Edge’ and realising what your Edges are:
I put in a quick mention to a ‘Ulysses Pact’ earlier in this Blog - this Golden Oldie on Psychology with particular reference to ‘The Brain’ by David Eagleman explains this in more detail along with lots of other intriguing Psychological principles:
Here is a Blog I wrote on Targets - I find using such Targeting helps keep me in my truly Great Quality Stocks:
This Blog has a lot of details on the wonderful ADVFN App which is Free and I strongly recommend it:
Here is the Legendary ‘Bear Market Blog’ - I am sure long term WD Readers have seen this a million times but if you are new to the whole WD fiasco then you might find this one useful (I am stunned to see it was actually published in March 2015 - golly gosh time doth whizz past):
And here is the ‘Price Vs. Value’ one I was on about:
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