CODEXCard 12 of 12 · 12 Mental Models
Patience in investing
The big returns are in the waiting.
Patience in investing, as Charlie Munger described it, means waiting for the right opportunities and then holding them long enough for compounding to work. He and Buffett made relatively few major decisions over many decades. Much of their result came from staying put, through dull years and noisy ones, rather than from frequent activity.
The reason is that compounding rewards time and punishes interruption. Each unnecessary trade, restart or change of direction carries costs, from fees and taxes to lost momentum and the risk of a new mistake. The same applies outside finance. Skills, relationships and reputations grow slowly, and constant tinkering resets the clock before the growth becomes visible.
The trap is confusing patience with paralysis. Sitting still on a decision you never actually made is not patience. It is avoidance. Munger's patience had two parts: careful, sometimes long waiting for a strong opportunity, then decisive action when it came, followed by calm holding. Without the decisive middle step, waiting has nothing to compound.
Patience links to opportunity cost and to avoiding stupidity. Being picky about what you commit to, and then refusing to fiddle, protects you from many of the most common self-inflicted losses.
Example
Someone starts learning the guitar and, after three weeks, feels they are not improving. They switch to piano, then to singing lessons, each time starting again from zero. Had they kept practising the guitar for six months, the slow, invisible gains of the early weeks would have started to show in songs they could play.
Try it this week
Pick one long-term effort you keep adjusting and commit to leaving it unchanged for the next month.
From 12 Mental Models (Charles T. Munger · 1995).
