I had a very interesting conversation with a client recently. During the course of our discussion, he mentioned to me that he thought that I was in one of the toughest businesses one could be in.
When I asked what he meant, he explained it was because it was so difficult for so many investors to wait out the bad times, to be patient, to overcome that desire we all have to get rich quick; and that it must be challenging for me, especially in times like these, to convince investors that, in the long run, it will be worth the wait; even if the wait seems endless.
It was a real coincidence that he chose that particular day to have that particular conversation with me. Here’s why:
Years and years ago I bought stock in a Canadian company. I did my due diligence. I believed in the company, in its future and its management; and the fact that the management owned a lot of their own stock. That told me they believed in themselves.
Over the years, despite the fact that the stock remained under-valued, I hung on to it. I never stopped believing in it. It’s been 10 years now. Last week my patience was rewarded. The company was bought. And my shares are now worth four times what I paid for them!
The lesson learned is relatively simple. Instead of being obsessed with ‘performance’, concentrate on ‘process’. Or, as a golf pro I played in a tournament with last week told me: “If you’re obsessed with your score you’ll never improve. You have to be focussed on your game, and your strategy.” The process, in other words.
Ironic, isn’t it, that, in one week, I had two conversations and a personal experience that were, in fact, all about the same thing: Process, then patience.
What happened to me with those shares is a textbook case of value investing. We invest in what we believe are good companies. We invest in what we believe is good management. We try to be careful shoppers, by buying at what we believe is a good price. And then we wait.
Get rich quick is not in our lexicon.