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Patience is a Virtue in Investing

Updated on May 20, 2017
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Jack Lee, a retired engineer, worked at IBM for 28 years. He has traveled all over the world and has been an active investor for 10 years.

Introduction

One of my investing strategy is to buy low and sell high. It may seem obvious and simple yet very hard to do in practice. One stock that I purchased a few years ago went down by as much as 60 percent before coming back.

- May 2017

Background

The history of my purchase of Lumber Liquidator (LL) goes back to March of 2015. That was about the time when the news broke about investigation of LL for harmful wood flooring products imported from China. Prior to this period, LL was riding high and doing very well. The stock price was over $100. When the price was down 1/3, at $33.50, I bought 300 shares. In my mind, this was a long term investment. I thought LL will be able to survive the scandal and return to profitablility. Over the next 5 months, the stock price continued to drop to a low of $14.77. That is when I decided to double down on this stock and bought an additional 200 shares. My holding is now 500 shares at an average purchase price of $26.

The price stayed around that value for the next 2 years rising steadily to almost break even until in May 19, 2017. A sudden surge due to some positive results and upgrades by Wall Street analysts pushed the price to $29.2. My threshold for selling had been reached due to a gain of 10% or more. My patience was rewarded with a gain of 12%.

Last 5 Years Chart of LL

Summary

Investing is sometimes a waiting game. If the underlying strategy is sound, all it takes is some patience. In this specific case, a wait of 2 years lead to a reward of 12%. This was a great example of patience and perseverence. It is also a gamble as most investments in the stock market are. In this case, it paid off.

© 2017 Jack Lee

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