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WHENEVER digging into the success story of millionaire investors like Warren Buffett, we will get the first idea “Invest for long term”. Of course, this is the most successful mantra of all successful investors in the world. Patience, a must quality, highly required by an investor to survive in the volatile stock markets and achieve proper result. I am correlating a small story below to understand the requirement of patience as well as stock selection with margin of safety.
Suppose you are participating a boat race competition that is required to cross a river with a small boat. There are huge waves and winds during the journey. But there is a convincing price also waiting for you. What you will do? Of course you will check whether you can swim to escape if something happening. Or you will take the precautions like wearing a life jacket.Before starting the race, you have to ensure the condition of the boat and ensure there is no leakage in the boat to come water inside. Once confirming, you can start race to the other end. While crossing the river, you have to face strong winds, waves. Once you fear these obstacles and hesitate to proceed, you will be a loser and somebody else will win and get the price.Morals in this small story are lot. Before starting the race, you will do a self check and take necessary precautions to escape from any bad situations. This is just like identifying your risk taking capacity in the stock market.Once to decided to wear a life jacket to overcome any bad situations, just like considering margin of safety measurement required to select and buy stocks.Winds and tides means the volatile stock market. Fear to start a race because of winds, is the same as selling the good stocks because of fear.
Once overcoming the winds and waves, you will reach the other side of river and will get the price. Just like being patient at the time of stock market volatility and corrections to receive good profit in the future.
Excuse me if my language is poor. Hope you understood the requirement of patience that is an extreme requirement in the investment world. Go ahead. Select proper stocks with ample margin of safety and enjoy the huge profit from your patience.
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