Clichés become clichés for a reason

Published in The Sunday Times on 1st February 2026.

Of all of the platitudes trotted out by financial market scribes, the most hackneyed has to be around the need for patience – “It’s time in the market, not timing” being the most cringe-worthy.  

The most successful investors often evangelise about the importance of long termism. As Warren Buffett famously stated: “our favourite holding period is forever.” 

Patience & a long term mindset 

Being patient and long-term considerate with stock market investing is obvious – if not helpful - advice. I often liken it to the weight loss guidance - eat less and exercise more! Like the golfer with the perfect practice swing until they put a ball down – the act of investing real money is much harder than the art of describing it.   

The logic behind patience and having a long-term mindset is rooted in fundamental analysis and the time value of money. In theory, a company is worth the present value of all of its future cash flows. A euro of earnings today is worth more than a euro of earnings in 10 years, because you use some non-zero discount rate in calculating the present value.  

But as Matt Levine of Bloomberg notes, a euro of earnings today is worth less than €10 billion of earnings in 10 years, unless the discount rate you are using is more than 900%. This is where the fundamental analysis part comes in. You should be willing to pay more for the stock of a company that makes no money now but will make a lot of money in the future, than you would pay for the stock of a company that makes a little money now and will continue to make a little money in the future. It’s horses for courses. You’d need an awful lot of patience (and much else) to invest in a cash furnace like OpenAI – which owns ChatGPT. You can be a little more sanguine with the Coca-Cola’s of this world. 

The payoff to patience 

An interesting paper from Columbia Business School - Exploiting Myopia: The Returns to Long-Term Investing - demonstrates the potential payoffs to patience.  

Many professional investors face pressure to show positive results quickly. For example, if their recent performance is poor, clients might withdraw money. Because of this, managers often avoid holding stocks that might take a long time to pay off, even if those stocks are good investments in the long run. This behaviour is referred to as myopia, or short-sightedness. 

The question the authors sought to answer then is - does this myopia create predictable patterns in stock returns? So they created a measure called Horizon, which shows how long active managers typically hold a company’s stock. A longer Horizon means investors are willing to hold the stock for a longer time. 

Longer holding periods associated with better returns 

The main finding is that companies with a longer Horizon i.e. an investor base with a longer than average holding period, earn higher future returns than those with a shorter Horizon. In other words, patient investors who can wait tend to earn more because others avoid these stocks. 

To prove that myopia causes this effect, the authors look at a rule change by the U.S. Securities and Exchange Commission (SEC) in 2004. This rule made mutual funds report their holdings more often, which increased pressure on managers to perform well in the short term. After this rule, affected firms saw their Horizon drop, and the link between Horizon and returns became even stronger. This suggests that more short-term pressure leads to more mispricing and bigger rewards for long-term investors.  

In terms of the magnitude of this effect, a 1% increase in Horizon translates to around 20 basis points (bps) of monthly returns, or 2.4% annualised. The return premium could be reflecting informational advantages of long-horizon investors – but the authors were able to control for this. So this is a pricing effect stemming from the market’s overall short-term orientation. 

Confirmation bias

In writing about this, I may be guilty of confirmation bias  - as this conclusion is consistent with my prior held beliefs. But it passes the smell test - it realistically aligns with what I know and observe about financial markets. 

It would be corny to conclude with banal advice about being patient and long term. I think most people reading this will accept its importance, intellectually at least. Every client I’ve ever met is long term oriented, until the cheque is written. The lived experience of stock market investing tends to rein in investors horizons. You need to encounter the vicissitudes of stock markets to appreciate that clichés become clichés for a reason. 

Emerging Markets worth considering

One investment opportunity that strikes me as being a victim of investor myopia are emerging markets. The large gap between emerging markets’ share of global GDP and their share of global equity capitalisation is consistent with a Horizon‑based mispricing. That mispricing looks currently significant when you consider strong earnings growth expectations – which exceed those in developed markets – and valuations at more than a 30% discount to global equity.  

It’s possible that EM’s historical underperformance reflects genuine fundamental factors rather than investor shorttermism; however, current fundamentals appear strong enough to warrant some benefit of the doubt. 

There’s far more to investing than just being patient and long term. But it’s a good start if your mind is not set on seeking instant reward. There’s several places in Las Vegas that can better serve - or exploit - this urge. 

Source: Data is sourced from Bloomberg as at market close 31st December, returns are based on total indices in local currency terms, unless otherwise stated. 

Gary Connolly is Investment Director at Davy. He can be contacted at gary.connolly@davy.ie or on X at @gconno1.