Practicing the Art of Patience 161houses ’ inability to be sold as quickly as stocks, given that the same
measures of safety and prudence have been applied as if one were
making an investment in stocks. If the home was (a) bought at a
sensible price, (b) purchased with a long - term ownership orien-
tation and not a short - term speculative purpose, and (c) paid for
using money for that stated purpose, then homeowners won ’ t be
subject to accepting Mr. Market ’ s offered prices. Unlike stocks,
homeowners aren ’ t seeing quoted prices fl ash by the minute
across their computer or television screens. But even if they did,
no rational homeowner would rush to sell a home because the
“ quoted ” price was 10 percent less in the afternoon than it was in
the morning. With stocks, a quick call to your broker or click of a
mouse is all it takes to unload your shares. Selling homes requires
more time. But if houses were bought and sold as quickly as shares
of stock, most homeowners and real estate investors would likely
sell at the fi rst sign of trouble — and thus sell too low.
Indeed, there are meaningful differences between home own-
ership versus stock ownership. Even if your home is worth less,
it still provides you shelter whereas a declining stock price only
serves to reduce the value of your portfolio. Nonetheless, the
general thought process behind the buying and selling of either
asset is of great value when thinking about stocks. The litmus
test question, again, is to ask yourself whether the true worth of
the underlying business has equivalently changed by the same
amount as the stock has in the six and a half hours that make up
each trading day.
Unfortunately, investors have their work cut out for them in
utilizing their patience to the greatest advantage. Nothing in the
fi eld of investment today serves to promote a patient approach.
Mutual fund managers are only as good as their most recent year ’ s
investment performance. Brokers don ’ t get paid to tell you to do
nothing; they earn a living by promoting activity. Analysts pump out
information on the performance of a company based on the nextCH008.indd 161CH008.indd 161 9/2/09 11:48:58 AM9/2/09 11:48:58 AM