Time and Patience


The other day I was looking at a mutual fund I represented and sold over 35 years ago. I’ve kept up with it through the years, the return it’s made and the dividends its paid. In this hypothetical I will assume someone invested $100 in that fund on May 1st, 1986. How much could, or would, it have grown, reinvesting all the dividends, through the end of April 2021?

I asked my wife this question. She said that she wouldn’t be surprised if over that 35 years it had grown to over $1,000. Kidding with her a little, I said, “That’s ten times the money, sweetheart. What have you ever known that would return to you ten times what you paid for it?” She sheepishly backed down a little and said, “well, maybe $700 or $800. Thirty-five years IS a long time.”

Then I told her that, no, that original $100 investment would have grown to be worth, not $700, not $800, not even $1,000. No, it would have grown to be worth over $4,600!! She was flabbergasted. “What kind of return did it make over that time,” she asked. I figured it up and it came to just a little over 11% per year over that thirty-five year time frame.

Is that an outrageous rate of return? No. Is it unreachable? Certainly not. Other mutual funds performed equally well or better. Then what was it that made the return of this fund so spectacular? It was… time! Thirty-five years is a long time to leave something alone. So, giving it the time to let it work, and the patience to leave it alone while it worked, is the magic formula.

Over all those years it lost money plenty of times. Even last year, between February 12th and April 3rd, just a little over 7 weeks, it lost almost a quarter of its value. But it came back and performed well.

I’m telling you this story not for the purpose of touting my own skill at picking investments, but to let you know that the stock market can work, even if many financial salesmen, and many in the news media try to scare you out of it. It won’t always go up, as I’ve mentioned. But given the time to work and a good portfolio manager, your investment in the American Free Enterprise System has a better chance of working to build your wealth than just about anything else you can name.

I’ve been doing this work for 38 years. I’ve been through bull markets and bear markets. I’ve seen them both play out. I’ve been scared by sudden crashes, and I’ve gotten overconfident when things were going well. In all that time I have learned that when it comes to investing, you celebrate no victories and you agonize no defeats. You just keep on keeping on.