How I accidentally taught myself the art of patience

Everyone knows that “patience is a virtue”; it’s the one cliche I’ve said to myself more than any other.  Why?  Probably because it’s one quality I’ve never been very good at.  I eventually taught myself the art of patience, at least when it comes to investing, and I didn’t even realize it.

I’ll admit, I’m not a very patient person in general, but that’s not the point of this post!

When you adopt a “buy and hold” investing strategy (and really, why wouldn’t you?), patience is the very foundation of that strategy.  Without it, your entire thesis goes right out the window and “buy and hold” becomes “buy and sell”.  We all know how that usually ends.

I recently was reading The Dividend Guy’s piece on the triple digit club, and it got me thinking about my own triple digit club.

What is the triple digit club?

The concept is quite simple: to become a member of the triple digit club, you need show 100%+ growth in a stock since your purchase.  For those of you who didn’t pay attention in math class for percentages and decimals, a 100% increase would be double what you originally paid.

“Hmmm,” I asked myself, “do I have any triple digit club members?”  After a quick glance to my spreadsheets, I found the sad, depressing answer.

None.  Zero.  Zilch.

I was triple digit club member-less

I dabbled in the stock market during the dot com boom, but hadn’t touch an individual stock again until I started buying a few shares in Mrs Benjamins rollover IRA in June of 2015.  I then opened a robinhood account in August of that year, once their android app was available.  Even with the historic run of this bull market, and after two plus years, I had no triple digit club members.

The first stock I bought in the IRA was Southwest Airlines; June 10th, 2015 for $34.50.  My cost basis is now $34.90 after DRIP’ing all this time, and I’m up 73.87% as of this writing.  Not bad.

I couldn’t resist buying Amazon in February of 2017 for $804.60, for a return of 96.97% since then.  Even better.

There are a few similar stories from my earliest purchases.

Oh, but what might have been

I started to think about some of the stocks I bought, but no longer owned:

  • Netflix, bought in September 2015 for $101.25, sold January 2017 for $140.55
    • I thought there was a peak, I planned to sell and get back in lower.  It never went lower.
    • Today’s price: $317.50 for a return of 213%
  • Wynn Resorts, bought in November 2016 for $88.82, sold April 2017 for $125
    • I thought I was brilliant and would go ahead and bank my 41% return.
    • Today’s price: $184.19 for a return of 107%

There might be others, but frankly the research is too painful.  I was impatient and it cost me.  I would have introduced at least two members to my triple digit club, in just a short period of time, but I didn’t.

Even as an adult, I acted like a child

You have little kids?  You ever tell them not to touch the hot stove, or keep their hand out of a fire?  Did they listen?  Probably not.  

I knew the best avenue for creating wealth was staying idle, patient; buying stocks and waiting.  Yet, I couldn’t resist.  I saw $$$ and I sold.

It didn’t matter what other people had told me, or what I had read, or what my brain knew to be true.  I didn’t learn the lesson until I experienced touching the hot stove for myself.

What have I learned?

I can’t say I won’t ever make the same mistake again, but next time I’ll at least have some justification for why I sold something.  I did’t have a plan before.  I couldn’t defend why I had purchased something, why I was holding it or why I chose to sell it.  And while I’m by no means a financial expert, I at least have a greater understanding of the shares I hold in my portfolio and what it will take for me to decide to sell.

And that’s how I accidentally taught myself the art of patience, at least when it comes to investing.

 

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