I was googling around for this topic and as usual, Wikipedia came to the rescue. Sadly, it's still loss-making because donation somehow doesn't work on the internet. Google should just buy them out.
So what did Wiki says about Patience? It's actually part of the seven heavenly virtues which are counterparts of the more famous seven deadly sins, protrayed in the cult movie starring Brad Pitt and promoted Kevin Spacy and Gwyneth Paltrow to stardom. Patience is described in more context than our current world usage: usually like waiting patiently for someone or for the MRT to actually move smoothly. Accordingly, it is about endurance, moderation, grace and forgiveness. The counterpart in the sins is wrath.
In investing, the masters have talked about this over and over. And this is the Nth time I am re-learning this lesson as well. Baseball is the favourite analogy. It is known that the best baseball players do not anyhow swing. They wait for the perfect pitch. When the pitcher screws up and throws a slow ball, in the right zone, they swing the bat and hit that sayonara home run. In buying stocks, it's the same. You don't just buy when Singtel drops 10%. You wait for something to happen or some crisis for the stock to fall really, really cheap. Actually it's sort of happening now with some of our Indonesia exposed names like Jardine Cycle and Carriage.
And you swing when the slow fat pitch comes. Like when Jardine drops to $30, when it's PE hits 8x and its dividend yield goes up to like 6%. Imagine! 8x and 6% for the No.1 auto and motorcycle distributor in Indonesia where both auto and motorcycle market would likely be in the Top 5 globally in the next few years.
These opportunities do not come often. Usually once every few years. The last time Jardine was this cheap was 2011 when the Greek tragedy hit. As for Singtel, the No.1 stock in market cap in Singapore, the last time it was cheap enough was Lehman, that's half a decade ago. So as patient value investors, most of the time we should really just do nothing. It's called "sit-on-your-ass investing" according to Buffett. To deploy capital over mediocre opportunities simply just doesn't cut it, especially if we are trying to hit 8%pa kind of return.
Ok, that's patience in investing, but what about patience in life?
I think this could be the more important lesson. Patience in life could work in various circumstances:
1. When we are preparing to do something bigger. Hence needing the patience to remain in the current situation for longer, allowing more time for training and mastery.
2. In facing our adversaries, one of the best weapon is patience. Wait for them to commit mistakes. But we need to do our part in maintaining our best. The wait would usually take months if not years. Although sometimes we ought to leave the mud-house especially when the bosses are not on the right side. Choose not to wrestle pigs, if possible.
3. To garner support for change, sometimes it take years for things to move. Like the changes in our education system. Together with others (more prominent opinion leaders and education specialists), I have discussed about revamping PSLE a few years ago in a few series of posts on Education. Finally, something would be done. Well, at least, PM Lee promised.
Being patient in situations is not about admitting defeat. It is taking a step back to leap forward. It is taking time to strategize, recognizing that the time to act is not now. Recall the old battle scenes before machine guns were invented. The army needs time to reload their guns. So you cannot fire when the enemy is coming until they get near enough. Patience makes the difference.
Of course, there is a spectrum to everything. Pulling patience past its limit is cowardice. Unwilling to act after waiting and the opportune moment passed. That would also be a grave mistake. How do we know when is the right moment then?
Oh, we know. We ALL know. When the stock hits 6% dividend but we fail to act even though we already decided we must buy when it hits that price. We didn't because our balls shrunk and we say let's wait. It's the same feeling as seeing the girl leaving and our balls shrunk and we say, "next time I'll ask for her number."
To sum up, we need a suitable amount of patience to succeed in investing and in life. Train up and be prepared. Focus and wait for the opportune moment. Then seize the day! George Savile, an English statesman who lived 400 years ago also summed it up pretty nicely, "A man who is a Master of Patience, is a Master of Everything Else."