“Somebody’s sitting in the shade today because someone planted a tree a long time ago”
– Warren Buffett
It seems as if the human attention span is on the endangered species list these days. With the rise of the internet and mobile communications, it seems that we all think and communicate in 140 characters or less, and “Long Term” is defined as the next 5 minutes.
In the world of investing, the 24 hour news cycle has also collapsed the investment time horizon for many investors. People don’t think of their investing strategy in terms of producing results over a lifetime, or multiple generations, but instead fixate on daily market gyrations and quarterly results [see Turn off the financial news spigot]. This is one of the reasons why most investors aren’t as successful as they could be.
Warren Buffett is perhaps the ultimate long term thinker, and patient investor. He thinks of investing as an analogy to growing a tree – you may plant the seeds today, but you have to wait many years to enjoy the shade. Given the fact that most Americans will live through a 30 year period of retirement, in which the cost of living will likely rise by roughly 250%, more people should pay attention to this analogy.
Nick Murray is a wonderful author and speaker, and he puts it this way in his excellent book, Simple Wealth, Inevitable Wealth, which has a picture of a tree on the front cover:
“That’s right, it’s a tree. It’s not a computer screen, or an electronic stock quotation board, or a picture of a frenzied trading floor, or anything like that. It’s a tree.
You plant it in the earth, and a wonderful force of nature causes it to take root, and to grow. You don’t have to do much with it: the air and the water and the nutrients it needs are all around the tree, and it knows how to use them.
You don’t dig it up every 90 days to check on its progress. Nothing much will have changed in that brief time, and you might harm the tree. You don’t uproot the tree and store it in your garage over the winter, to protect it from what you regard as “bad weather”. Though its leaves fall and it stops growing for a season, the tree itself does not die. And even leafless, the tree is still producing oxygen, without which you and I could not live.
Give the tree enough room, enough light, and enough time. Then leave it pretty much alone. It will give you back air and shade and beauty as it grows – and will go on doing so for your children, after you are gone.
That is what investing is like – if you let it be. Wealth is no less organic than that tree; the growth of wealth in equities is no less a force of nature.”
This summer, instead of worrying about the markets, the world, the situation in Washington, or any other calamity…go out and sit in the shade of a tree and read a good book, knowing that time is on your side.