They say patience is a virtue. That doesn’t mean it’s a whole lot of fun.
Sometimes, I feel like Bill Murray in Groundhog Day, waking up to the same day each and every day and wishing the cycle would end. Each day, I research individual companies with a focus on businesses with competitive advantages and good management selling at low prices. On rare days, when prices deviate enough from fundamentals to merit action, I do some buying and selling. And yet, the cheap companies keep getting cheaper and the expensive ones just get more expensive. I’m waiting patiently for this cycle to end, but it’s not much fun.
Unlike Bill in the movie, I’m not trying anything radical to break out of the cycle. As Bill eventually discovers, the cycle ends not from bold or wild action, but from doing the right things. The cycle of the cheap getting cheaper and expensive getting more expensive will end, too. I just need to stay true to my purpose.
So, what allows me to maintain patience? Just like I know virtue leads to happiness and diet and exercise lead to weight loss, I know that buying cheap and selling expensive works over time. Added to this, I understand the concept of growing potential energy.
Potential energy is the result of a force acting on an object over time. When a spring is compressed, it has a lot of potential energy. That potential energy is eventually turned into kinetic energy when the spring is released.
The force, in this case, is crowd momentum causing the expensive to get more expensive. That force, applied over time, is compressing a metaphorical spring, conversely making the cheap become cheaper. That very process, though, leads to its own resolution. Because the system is not in equilibrium, the longer and further the spring is compressed, the more dramatic the eventual release of kinetic energy when the spring’s potential energy is transformed.
I have to be patient because no one knows how long crowd momentum will compress the spring (6 years and running, so far). But, knowing that the spring is just getting more and more compressed, creating a growing reserve of potential energy, makes it easier to be patient. I know that the longer the spring is compressed, the greater the reward–the release of kinetic energy–once momentum runs its course.
Or, as 17th century philosopher Spinoza put it, all things excellent are as difficult as they are rare. I’m feeling keenly the difficult and rare part, in time I will gain the excellence as well.
Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.