Patience Is a Virtue, Especially in Investing

by Marc Bastow | April 17, 2013 8:15 am

What do Amazon (NASDAQ:AMZN[1]), Disney (NYSE:DIS[2]), Nordstrom (NYSE:JWN[3]) and Starbucks (NASDAQ:SBUX[4]) have in common?

All four were holdings in my portfolio 10 years ago. And I sold off all four, one after the other, after becoming disillusioned with each one thanks to weak short-term performance.

Oh, what a fool I was. Here’s the share appreciation alone (Disney, Nordstrom and Starbucks also pay dividends) for each of my castoffs during the past 10 years:

If there’s anything to be learned from this wince-inducing anecdote, it’s the importance of patience — especially during tough times. The U.S. stock market has proven it continuously improves over time … and good companies tend to do the same.

It’s a lesson for all investors, young and old.

My colleague Alyssa Oursler, for instance, recently stuck her first toe in the equity pool[5] by purchasing McDonald’s (NYSE:MCD[6]), one the safest and most reliable dividend stocks on the planet. Has McDonald’s ever slumped? You bet. The whole of 2012 was virtually a mirror image of the S&P 500 — MCD dropped 12% while the broader market did the opposite (and a bit more). But if I believed in the business, would I have advised her to sell (had she owned it then) amid that disappointment? Heck no.

Instead, I’d have told her that if she was thinking of selling, to consider these three things first:

Remember these tips, and try to avoid panic-selling at the first sniff of trouble.

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he is long AAPL and JNJ.

Endnotes:
  1. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN
  2. DIS: http://studio-5.financialcontent.com/investplace/quote?Symbol=DIS
  3. JWN: http://studio-5.financialcontent.com/investplace/quote?Symbol=JWN
  4. SBUX: http://studio-5.financialcontent.com/investplace/quote?Symbol=SBUX
  5. stuck her first toe in the equity pool: http://investorplace.com/2013/02/buying-a-stock-simple-concept-but-a-complex-process/
  6. MCD: http://studio-5.financialcontent.com/investplace/quote?Symbol=MCD
  7. other red flags: http://investorplace.com/2013/03/3-red-flags-young-investors-should-watch-for/
  8. HPQ: http://studio-5.financialcontent.com/investplace/quote?Symbol=HPQ
  9. utter turmoil: http://investorplace.com/2012/10/5-reasons-to-loathe-hewlett-packard/
  10. most recently: http://investorplace.com/2013/01/3-retirement-lessons-from-apples-fall-aapl-amzn-ixn-cs-jpm-gs/
  11. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  12. BRK.A: http://studio-5.financialcontent.com/investplace/quote?Symbol=BRK.A
  13. BRK.B: http://studio-5.financialcontent.com/investplace/quote?Symbol=BRK.B
  14. JNJ: http://studio-5.financialcontent.com/investplace/quote?Symbol=JNJ
  15. WFC: http://studio-5.financialcontent.com/investplace/quote?Symbol=WFC

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