Nobody likes boring.
Boring people, boring conferences, boring sporting events, boring shows.
But… is boring what we need?
As a society, we have lost patience. Any kind of patience….
- When the gas pump takes longer to put gas in the car
- When our internet connect slows down
- When a text message won’t send
- When customer service tell us to hold for more than a minute
And as the technology age advances, the lag time in our decision making is almost completely eradicated…
- Venmo lets us send money to anyone we want…instantly
- Instagram lets us post anything about our lives…instantly
- Twitter shares us the news from any part of the globe…instantly
- And Robinhood lets us trade stocks…instantly
I could go on for hours with more examples of instant gratification we receive.
Now, all of those platforms have dramatically increased the quality of our lives but at the same time they are building in habits that are difficult to break. If you reread my post on making investing a habit, it takes almost 21 days to build a habit. And it takes longer to break a habit. So, how the heck are we going to be patient enough to let our investments grow?
In the investing world, we talk at nauseum about compound interest. Simply put, your investment earns money, reinvests that money, then the next round of earnings should have compounded on themselves. Here is a chart for those visual learners who already lost patience reading this article.
My point being, if we have instant access to do just about anything we want with our investments, how do we let compound interest do its thing? The key to compound interest is time and the amount we trade negatively impacts the amount of time we are compounding.
There are also millions of signs that investors are losing patience. Those signs are in the form of trading volumes which continue to grow out of control. Investors are trading at higher and higher volumes almost every year.
With boring investing, you really need to find quality companies to own for the long hall. If that’s too hard, find your favorite index fund and call it a day. There is a lot of wealth that can be generated outside of the sexy AI, machine learning, and biotech companies investors flocks towards. Sometimes a little bit of patience coupled with a great product is all investors need.
Take WD-40 for example. My guess is almost everyone reading this article didn’t even realize this was a public company. Also, probably everyone reading this article doesn’t know what the product they sell actually is. Most of us just think of “WD-40” the same way we think of Goo Gone, Velcro or Bubble Wrap. Its become a verb.
“I have no idea what I’m spraying on my door hinges but it works!”
Everyone owns the product but nobody knows what the heck it actually is. BUT, for those investors who spend the time sifting through the misinformation, an amazing investment has compounded on itself for over 30 years.
I know its boring.
We all know its boring.
But leave your investments alone and focus your instant gratification elsewhere.