for what and for how long?
Patience is underrated in this time and age.
In investing, this is a virtue to have.
Patience in reading and learning:
Since we invest in a wide category of companies, we have to read widely.
We organised our investments into 5 baskets (previously 8)
Cyclical and Turnaround Portfolio
Industry Leaders Portfolio
Special Situation Portfolio
Unrecognised Growth Portfolio
Every year, we have to diligently read and choose to do nothing for most of the time.
Building a portfolio of companies which differs in geography, investment timeline, profiles takes time and it cannot be rushed.
Patience in learning and allocating:
Recently, we unveiled two post detailing our positioning into Dawnrays Pharmaceutical and Dairy Farm.
What everyone did not realise is the amount of waiting we had put ourselves through to start building position in these two companies.
We started following the Dawnrays Pharmaceutical when Credit Suisse released a report on them in 2013. We did nothing as we had a hard time justifying their competitive advantages against the valuation. It took us a good 6 years before we pulled the trigger for our first purchase (still too early).
As for Dairy Farm, we have been looking at it since 2008. We like the businesses but could not understand how to value the investment holding structure. It took 12 years before knowledge caught up and a decrease in price allowed us to pull the trigger.
Patience in allocating and waiting:
If the company continues to perform according to our thesis, we must have the patience to wait for the thesis to play out.
“After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: it never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!
- Reminiscences of a Stock Operator by Edwin LeFevre
While we may all be anxious to get rich and start spending our wealth. The fact is that winning in investment takes just a helluva of time because we are compounding at 10 - 15% on an average basis.
We may be wrong on the investment and the company may turn out to be a dud but we must not be tempted to do something to a winning company with a winning share price. One investment that turns out to be 10 - 100 bagger would make a huge difference to your portfolio.
If you hope to achieve something faster, have a start-up where growth could average 30% growth per month for the next 5 years. Do your math and you understand why everyone is interested to move into a start-up and venture investing. But picking the right winner is tough and running a start-up that is growing or not growing is even tougher.
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