Why Patience is Your Most Valuable Asset in Investing

Investing requires an elixir of ingredients to produce a profitable strategy. Investing is usually identified with long term plans, yet the term encompasses all aspects of principal growth. One of the main ingredients for investing is patience.


/ˈpāSHəns/ – noun

The capacity to accept or tolerate delay, trouble, or suffering without getting angry or upset.

Profits = Compound + Time

Profit is a basic equation of strategy compounded over time. Time is the key element there. Anyone offering you outlandish returns is either delusional or lying. Be skeptical of promises and weary of massive gains marketed in less than week timeframes. Although this is certainly possible, the likelihood of it being sustainable and realistic is slim.

You must endure the long time windows needed to allow the strategy to work its magic, to compound over time.

We did an article last week on the compound effect and what a small 8% yield can accomplish in 40 years. Patience is the key; allow the strategy to do the rest. 

This is a Marathon, Not a Sprint

This idiom holds a tremendous amount of value and truth. Look at the bigger picture when investing. It’s easy to be mesmerized by short term gains, or paralyzed by anxiety and fear in the short term drawdowns and losses. This is the normal market volatility. The idea of investing is to build a passive income. If you want to stare at the screen all day, by all means, go ahead, but try to look at the bigger picture objectively before reacting with emotion. Remain stoic and objective when investing because emotions will be the eternal demise of your portfolio otherwise.

Remove Emotion

Appending to the previous section, removing emotion is easier said than done, which, as humans, we are all well familiar with. The best antidote to affective reactions is to trust the strategy and/or NOT to invest more than you are able to lose. If you find yourself slipping into a pit of anxiety at the slightest drawdown on an hourly, daily, or even weekly timeframe, step back and do some inter-perspective analysis and discover the root cause of that emotion. Do you trust the strategy? Do you trust your hired professionals (PlutusX for example)? Do you have too much money invested? Chances are one of those three questions are the root cause of those negative valence emotions that you are feeling. After diagnosed, you are prescribed several remedies. Refine and backtest your strategy to build confidence, or hire a professional with a track record. Above all, you can always lower the amount of money you have invested so your emotions stay intact.

Once again, the objective is to remain calm and NOT get influenced by personal feelings or opinions. Practice stoicism and do the above prescriptions to mitigate and soothe your anxiety levels before or after they arise.

Strategies Are Never Perfect

There is no such thing as a perfect strategy and it can be immediately derailed by unexpected fundamental news being released. Take our latest Crude Oil Trade in April. Although PlutusX executed slightly early, the technical analysis (“TA”) was still accurate and true. Several major politicians made announcements, particularly Trump who sanctioned band against Iranian Oil, which resulted in oil prices skyrocketing. Regardless of the news release, the price action was still in our bounds of TA and after fundamentals, price action always retraces back to the TA. These are exemplary situations that demand the capacity of patience. We see that after a month of negative on Crude Oil, profits are still made because our team was able to remain patient and look at the market objectively.

Had it been the way of certain members or, in this case, even lots of other “credible” traders, we would’ve taken the loss, resulting in a major hit in the portfolio. What we did instead is, we trusted our strategy and executed on what we saw on the charts, not what our emotions told us.

If you do not have the ability to look at the markets objectively, then having a team of professionals doing the work for you may be the best solution. If you are interested in learning more check out our community chat and MAM channel.

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We are not financial advisors and none of this information should be misconstrued as financial advice. We strongly suggest that you consult your personal financial advisors. We suggest that you continue the research before coming to a decision even if this article is considered a portion of your research.

*Please note all investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance. Historical returns, expected returns, and probability projections are provided for informational and illustrative purposes, and may not reflect actual future performance.

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