Slow and Steady Wins the Race: Why Patience Outpaces Intelligence and Luck in Investing

As September reaches its midpoint, the hot summer weather has finally begun to break, and small, welcome changes can be seen: less humidity, more days in the 70s than 90s, and a bit of crispness to the morning air.

The market, however, doesn’t seem to have gotten the memo on change.

After a trying three quarters in 2022 we finally saw an upswing from October to June 2023. Since then, though, we’ve been in a sort of holding pattern. The markets have more or less flatlined – perhaps waiting for fears of recession to further abate, or corporate earnings to remain resilient in the face of uncertainty.

Either way, feeling stuck in place has its own challenges, but it sparks a question: What makes for true investment success? Ultimately, it boils down to one of three things:

  • You’re smarter than others.
  • You’re luckier than others.
  • You’re more patient than others.


Why being smarter than others isn’t enough

There are a lot of really smart people out there. Beyond that, there are supercomputers whose capacities exceed human reach. As you’re reading this newsletter, thousands of PhDs, super geniuses, and supercomputers are scraping every single bit of data that you can imagine to try and outsmart what the market’s doing.

We’re not talking regular smart here. We’re not even talking Carl Sagan smart. We’re talking about near-omniscient genius that is close to infallible. All the time.

That is really hard to match. The good news is, you don’t have to. Just being smart is not the answer, because no amount of intelligence can factor in the unknowable. And the unknown unknown is always at play in the market.

That’s why even the smartest analysts and most advanced algorithms sometimes get it right … and sometimes fail spectacularly. It’s easy to want to emulate people or programs that “beat the system” when they are the headline of the day, but the news cycle overemphasizes the winners and rarely remembers the losers. Why? Losing is so common, even for the super smart, that it’s not news.


Is luck the answer?

Have you ever seen someone hit it big at a casino – or had the good fortune yourself? It is, no doubt, a fantastic feeling, but it can lead to the ongoing desire to win “just one more time” against a system that is not known for consistent long-term wins.

And it’s the long term that matters here. Investing is not a casino, where we pin our fortunes on a guess about whether the ball will settle on black or red. Proper financial planning relies on empirical data that shows that patience – not luck – is the key to being around long enough to reap rewards as the market eventually rights itself over time.


Patience: The easiest hard choice you’ll ever make

It’s not enough to be smart, and luck is not sufficient for long-term success. That leaves us with patience. Patience is not a skill, but rather a choice that’s available to us all. It works well in many aspects of life, including our financial lives. It’s universally available, and we don’t have to pay for it.

What’s the catch, you might ask? If it’s free and available to all, and it works, why isn’t patience a no-brainer? Because it’s hard. Sitting still during the storm requires calm and discipline to avoid rash decisions fueled by the emotion of the moment.

But the bottom line is that the average impatient investor who thinks he’s smarter or luckier than everyone else oftentimes loses out to the patient investor.


Slow and steady wins the race

We’re in this stretch that looks like nothing is happening with the market, so it’s tempting to try to outsmart the system or gamble on the latest hot stock hoping for that stroke of luck to move us forward. But remember the tortoise and the hare. When you look at a tortoise you can barely see it making progress, it’s so slow. At the end of the day, however, it’s the tortoise crossing the finish line.

As your partners in planning for a future of financial freedom, it’s our job at N1 Advisors to steer you toward the strategies that have the greatest likelihood of getting you across the finish line. Most of the time, that strategy is not flashy or exciting. But the axiom is true: Average performance sustained for an above-average period of time routinely leads to extraordinary performance.

We’re proud to stand by you – through slow stretches as well as the moments of triumph – not letting temporary ups and downs distract us from the long-term vision you have for yourself and your family. Time really is everything when it comes to working towards achieving your financial goals, and it’s on our side when we choose patience.