The Power of Patience in Investing

The stock market has gotten real ugly recently. In August, the Straits Times Index (SGX: ^STI) had fallen by more than 10% from peak-to-trough based on closing prices. Yesterday, the index closed at 2,869 points, some 19.2% lower than a 52-week high of 3,550 points.

Times like these can be extremely frustrating for investors. That’s why they are also good occasions to trot out the virtues of patience when it comes to investing.

Sitting-still has its rewards

Back in 28 October 2013, I bought shares of healthcare services provider Raffles Medical Group Ltd  (SGX: R01) at S$2.90 apiece. You can see in the chart below how my experience with the company’s shares have been like since then:

Raffles Medical Group share price chart

Source: S&P Capital IQ

It’s worth noting how my shares had bounced around the $3 mark for six months or so before experiencing a spurt to roughly S$4.00. Raffles Medical’s stock then stayed near that level for nearly a year before moving to S$4.51 as of yesterday, giving me a satisfying 55% return so far.

Another investment which really instilled in me the importance of being patient is the U.S-based computer and console games maker Activision Blizzard.

Activision share price chart

Source: S&P Capital IQ

I first invested in Activision Blizzard back in 26 October 2010 when it had a stock price of US$11.31. With it closing at US$30.52 yesterday, I’m up a cool 162%. But, it wasn’t an easy-going ride – plenty of patience was involved in the process.

As you can tell from the chart above, there was a good two-plus years when Activision Blizzard’s shares did absolutely nothing for me

When patience makes sense

It’s worth noting that in the period when Activision Blizzard’s shares were frozen in the wild, the company was still churning out industry-leading game franchises and had a fortress-like balance sheet with billions in cash and zero debt. In other words, while its shares did nothing, its business was doing great.

It was a similar thing with Raffles Medical. When it was bouncing around S$4, the company already had some very visible growth prospects, such as the expansion of its flagship Raffles Hospital in Singapore and the development of a medical/retail centre in the Holland Village area. Plus, it had a great balance sheet as well that carried minimal debt in relation to its cash holdings.

A Fool’s take

Patience, when coupled with companies that have solid businesses and bright futures, really does pay in investing. In trying times like what we have now in the market, it’s crucial that we do not lose this perspective.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing owns shares in Raffles Medical and Activision Blizzard.