The trees that are slow to grow bear the best fruit

The trees that are slow to grow bear the best fruit

We live in a fast-paced age where “instant culture” sets the tone. Instant results, instant meals, instant payments, instant gratification. There have been dramatic changes to the general behaviour of society since the beginning of this century. People want everything, and they want it now! It just goes to show that patience is a virtue, which very few possess nowadays.

Warren Buffet once said: “The stock market is a device for transferring money from the patient to the impatient”.

Growth from shares cannot be expedited by anyone to bring instant riches. You can however choose whether you want to include growth- or value stocks (or both) in your investment portfolio to establish capital growth over the long-term.

I’ve borrowed the following analogy from Thomas Smith which I think explains the difference between the two quite comically.

The Tortoise and The Hare

Imagine for a moment that you are a spectator at the race between the tortoise and the hare and that you have placed a wager on the tortoise. As the gun sounds, the hare quickly sprints into the distance, while the tortoise is just beginning its first lumbering step. The tortoise, like steady growth stocks, is competitive in the long run, but there are times when the hare will run far, far ahead, and may even hold that lead for a long time.

It is at these times you must remain patient. Eventually, the hare will run out of steam or even begin running back toward the starting line. In recent memory, we have experienced two major hare reversals - first with technology stocks in the early 2000s and again with financial stocks in 2008.

In the future, we will certainly experience other similar occurrences but if you focus on the steady growth stocks, you can win the long-term race and avoid much of the volatility and gut-wrenching emotion that sabotage the rabbit riders.

PSG Wealth Financial Planning (PTY) Ltd is an authorised financial services provider. FSP 728.