Patience
McElroy Relations - Pawleys Island, SC – July 2026: In family gatherings patience is not simply a virtue.
It’s a discipline that keeps us together.
In investing, patience is not simply a virtue. It is one of the most important elements of our proprietary “reward to risk” discipline here at Glenwood.
Markets are designed to test human patience. Prices rise and fall, headlines create anxiety and foster unwarranted extrapolation, and every market cycle can produce a new reason to believe that something has fundamentally changed. Investors are constantly tempted to react. That is, to sell when markets fall, chase whatever is rising, or abandon a carefully considered strategy in pursuit of something that appears more attractive in the moment (think FOMO, the “fear of missing out”).
The many matters trying our patience today include mid-term elections, new political movements, inflation, interest rates, Iran, Russia/Ukraine, and enough disruptive innovations to make our heads spin. Yet successful, long-term investing is rarely about making the perfect decision at the perfect time. It is about the discipline to make decisions consistently and giving them enough time to work.
The power of patience begins with understanding that markets are inherently unpredictable in the short term. Even excellent companies can experience periods when their stock prices decline. A wave of investor “sentiment” can overwhelm a company’s or a market’s fundamentals, not to mention that the market is increasingly being executed and moved by algorithmic and systematic trading.
It is critical to remember the difference between information that changes the fundamental value of an investment and noise that merely changes its market price. The patient investor strives to distinguish between the two. A famous long-term investor once provided this interesting analogy: On a day-to-day basis the performance of the market is a “voting” machine, while for the longer term the market is a “weighing” machine.
As one example, think back to March 2022 when the Federal Open Market Committee (“FOMC”) initiated an unprecedented chain of increases in its target interest rate that ultimately resulted in a 4.25% target rate increase for the year. Glenwood’s reward-to-risk discipline, and the patience built in, enabled us to ignore the “noise” and rely upon fundamental values and our long-term outlook.
Patience allows the mathematics of compounding to work. Investment returns generate additional returns, and over long periods that compounding can become a powerful contributor to long-term wealth accumulation. But compounding requires time. Constantly moving in and out of investments, attempting to predict every market turn, can interrupt that process and introduce unnecessary costs, taxes and mistakes.
Perhaps most importantly, patience is a discipline that protects investors from their own emotions.
Fear and greed are among the most powerful forces in financial markets. Fear may encourage selling precisely when pessimism is greatest, and greed can encourage buying after much of the optimism has already been priced in. Patience creates space between an emotional reaction and a financial decision.
Of course, patience should not be confused with complacency or hesitation. Patience is only valuable when paired with the conviction to act when opportunities arise. Those opportunities are the result of a discipline that includes the passionate pursuit of cutting-edge research, analysis, knowledge, and strategic thinking; and a process built around valuation, diversification, and the goals and risk profiles of each investor.
Ultimately, successful investing is less about what happened last week or might happen next week and more about positioning to benefit from what is likely to happen over many years.
The market will always offer reasons to worry and become distracted from opportunities. Patience provides the discipline to maintain perspective, make sound decisions, keep emotions from dominating the process, and gives long-term strategies the one ingredient they cannot do without: Time.