The founder of The Bear Traps Report, Lawrence McDonald, says that some of the world’s leading investors share a common philosophy: that it pays to wait patiently.
Just “Sit In The Boat” And Wait
On Wednesday, appearing on The Master Investor Podcast, McDonald recalled a conversation with the late Charlie Munger, former vice chairman of Berkshire Hathaway Inc. BRK, who told him, “Human nature is your greatest enemy at market lows.”
“At your absolute climax of fear, you must do the exact opposite of what you want to do. And once you've done that, leave it alone because the real money is in the waiting,” Munger said.
Munger once invited McDonald to Omaha, where he told him that if he could go back and give himself advice 30 years ago, it would be to “sit in the boat” and just wait for those “one to two trades a year.”
McDonald notes that this mindset is not unique to Munger, with fund managers David Tepper and David Einhorn offering similar counsel. He says, younger investors in particular often feel the need to act constantly, but overtrading can be costly. “That's one of the things that really hurts a lot of young investors,” he says.
Warren Buffett Shows That Patience Pays
Munger’s long-time business partner, Warren Buffett, is a clear case for why patience pays in the long run. Referred to as the “Oracle of Omaha,” 98% of Buffett’s $160 billion net worth was earned after he turned 65.
“My life has been a product of compound interest,” Buffett had said in the past, and similarly, his net worth witnessed an exponential 5,233% increase from the time he turned 65 till now, from $3 billion to $160 billion.
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