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Article by: I.K Adusei

In the realm of investing, Warren Buffett and Charlie Munger stand as titans, not only for their extraordinary wealth but for their approach to achieving it. Their philosophy is simple yet profound—patience.

One story that encapsulates the power of patience, and the consequences of its absence, comes from the book, The Psychology of Money. It’s a tale about one of Warren’s business associates, Rick, and how his impatience led to a fateful financial mistake.

As Warren famously put it, “Charlie and I always knew that we would become incredibly wealthy. We were not in a hurry to get wealthy; we knew it would happen. Rick was just as smart as us, but he was in a hurry.”Rick, like Warren and Charlie, was a sharp investor.

He had the intellect and knowledge to thrive in the financial markets, but his downfall wasn’t due to a lack of intelligence. Instead, it came from the impatience to see results quickly. Rick couldn’t wait for the slow, steady rise of wealth. He wanted to accelerate the process, and in his pursuit of quick gains, he leveraged his investments with margin loans—a decision that would prove disastrous.

The Downturn That Changed Everything

In 1973 and 1974, the stock market experienced a significant downturn, one that would go down in history as one of the most severe bear markets.

During this period, the market plummeted by almost 70%. For investors like Warren and Charlie, this wasn’t a cause for panic—they were in it for the long haul. They knew that markets fluctuate and that time would restore the value of their investments.Rick, however, didn’t have the luxury of time. Because he had borrowed money to buy more stock through margin loans, he was highly exposed when the market dropped. As stock prices plummeted, Rick faced what every investor dreads—margin calls.

In simple terms, this meant he was required to either deposit more funds into his account or sell off some of his holdings to cover the borrowed money. Unable to meet these demands, Rick was forced to sell his Berkshire Hathaway stock at a devastatingly low price—under $40 per share.Who bought it? Warren Buffett, of course. “I bought Rick’s Berkshire stock,” Warren later revealed.

At the time, $40 per share may not have seemed like a significant deal, but history would soon prove how monumental that transaction was. Today, Berkshire Hathaway’s stock is worth hundreds of thousands of dollars per share, making Rick’s forced sale a painful financial misstep that could have been avoided with patience.

The Power of Patience in Wealth Building

The contrast between Rick’s experience and Warren and Charlie’s approach is stark. While Rick’s impatience led him to borrow money and take on more risk, Warren and Charlie remained steadfast in their belief that wealth is built slowly over time. They didn’t rush the process; they trusted it.

This brings us to an important lesson for any investor, seasoned or new: the true power in investing doesn’t lie in getting rich quickly, but in allowing your investments the time to grow. Warren and Charlie knew that wealth was inevitable because they understood the compounding effect of time. As Warren once said, “The stock market is designed to transfer money from the Active to the Patient.”

Warren and Charlie were able to buy Rick’s stock at a low price not because they were smarter, but because they were patient. They didn’t lever up or take unnecessary risks, and they weren’t swayed by the market’s volatility. They knew that patience would eventually be rewarded, while haste often leads to losses.

The Perils of Leverage

Rick’s decision to leverage his investments serves as a cautionary tale for all investors. Leverage can appear to be an attractive strategy—using borrowed money to increase your the allure of faster gains, it also exposes you to much greater risk. When the market moves against you, those leveraged positions can quickly unravel, just as they did for Rick.

In contrast, Warren and Charlie’s strategy of avoiding leverage and remaining patient allowed them to capitalize on opportunities created by others’ impatience—like Rick’s forced sale of Berkshire Hathaway stock.

The Role of Emotional Discipline

At the heart of Warren and Charlie’s investment success is emotional discipline. They weren’t just financially patient; they were emotionally grounded.

Markets are emotional beasts, driven by fear and greed, and those who get swept up in these emotions often make costly mistakes. Warren and Charlie were able to keep their emotions in check, resisting the urge to panic in downturns or chase quick gains in good times.

Rick, on the other hand, fell prey to the emotional side of investing. In his rush to accumulate wealth, he allowed impatience to dictate his strategy. When the market turned against him, the emotional pressure of margin calls forced him into a corner, leading to a decision that would haunt him financially for years to come.

For modern investors, this story is a reminder of the importance of emotional resilience. It’s easy to become impatient, especially in a world where instant gratification is the norm. But wealth-building, especially in the stock market, is not about speed—it’s about consistency and endurance. Those who can manage their emotions, like Warren and Charlie, are the ones who will thrive in the long run.

Wealth Is a Slow and Steady Journey

Warren and Charlie’s journey to immense wealth wasn’t built on quick wins or lucky bets—it was the result of disciplined, patient investing. Their success shows that building wealth is a slow and steady process, one that requires not just financial knowledge, but emotional maturity and the ability to resist short-term temptations.

Rick’s story is a poignant reminder that even the smartest investors can stumble if they’re in too much of a hurry. It’s not enough to be intelligent—you also need the temperament to stay the course. As Warren Buffett has famously said, “You can’t produce a baby in one month by getting nine women pregnant.”

Final Thoughts: A Timeless Lesson for Investors

Rick’s downfall was not a lack of intelligence or even bad luck—it was the result of impatience and the risky behaviour that often accompanies it. His story, juxtaposed against Warren and Charlie’s slow, steady approach, illustrates one of the most fundamental truths in investing: wealth takes time to build.

As investors, we would do well to remember this lesson. In a world that constantly urges us to move faster, take bigger risks, and chase instant results, it’s easy to lose sight of the long game. But the greatest fortunes, like those of Warren and Charlie, are rarely built overnight. They’re built on patience, discipline, and the wisdom to avoid being in too much of a hurry.

So, whether you’re just starting your investment journey or are well along the path, take a page from Warren and Charlie’s book. Embrace patience, stay emotionally grounded, and remember that wealth, like all good things, takes time. Don’t be in such a rush to get rich that you lose sight of the enduring value of time itself.

The Author, I.K. Adusei, is a prolific writer of immensely intuitive books and articles.

You can now order hard copies of his book How To Start Small: Financial Skills For Business Success on Amazon for it to be delivered to your doorstep or a selected pick-up location in any country or state.

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