Warren Buffett: Patience Will Translate to Massive Returns

Using Warren Buffett as an example, here’s how investors can practice patience in order to maximize their investing success.

| More on:
close-up photo of investor Warren Buffett

Image source: The Motley Fool

Warren Buffett is a patient investor. Yet, patience remains an undervalued quality in investing. But it is one of those qualities that can make all the difference. Because we can’t always time our market moves. In fact, the success rate of market timers is pretty bad. Even the “pros” have a bad track record.

That’s just the nature of a market. There are so many variables that go into its moves. For example, market psychology dictates many of its moves. Interest rates and global events also dictate many of its moves. And the list goes on and on. The point here is that it’s difficult enough to predict these variables. To correctly time them as well is a big task.

Warren Buffett: “The stock market is a device for transferring money from the impatient to the patient”

So, we are left with the obvious. Since correctly timing the market has proved to be elusive, we need patience — patience to allow our investment thesis to play out through the ups and downs. Warren Buffett knows this. It’s part of what has given him his success.

With this in mind, let’s look more specifically at some stocks.

Would Warren Buffett buy Drone Delivery Canada stock here?

Drone Delivery Canada (TSXV:FLT) is a leading drone logistics firm based in Toronto. Its drone delivery business has big potential. But everything here is in the early stages. And Drone Delivery’s stock is extremely volatile. The company is just starting out.

The business is definitely interesting. Drone Delivery Canada can allow access to remote markets. It can speed up delivery by bypassing highways. It can reduce costs. Ultimately, it is working to transform the last miles in the delivery chain.

But I think we can be patient with Drone Delivery Canada stock. If this business will take off, we have time to buy it. Time will prove out the bullish hypothesis. Or it will disprove it. Either way, when you decide to make a move, the risk will presumably be lower. I think Warren Buffett would also be patient and watch how this unfolds before stepping in.

Warren Buffett is buying natural gas

Natural gas stocks have been the losers of the last few years. But this hasn’t stopped Warren Buffett. In contrast, it is probably part of what interested him. This, and the fact that natural gas will be a vital energy source of the future, regardless of what the market is telling us.

Armed with patience and his conviction, he can safety venture into this space. Of course, he focuses on the best and biggest in the natural gas sector. This strategy enables him to minimize company-specific risk. He is left with a more direct play on the natural gas industry.

For us Canadians, the safest way to get natural gas exposure is through Enbridge (TSX:ENB)(NYSE:ENB). I mean, there are other pure-play natural gas companies that also look good. But they’re more risky.

Enbridge is one of North America’s leading energy infrastructure companies. It transports nearly 20% of the natural gas consumed in the United States. Also, Enbridge Gas is North America’s third-largest natural gas utility. It also transports about 25% of the crude oil produced in North America.

Enbridge stock is yielding 7.5%. This is a lot for stock like Enbridge. It has a defensive business. It’s backed by consistent cash flows. And it has financial strength. Such a high yield in such a high-quality stock does not happen often. I think that Enbridge stock is a stock Warren Buffett would go for.

For those of you who want something with a higher-reward/higher-risk profile, I have something. Peyto Exploration and Development (TSX:PEY) is one of the lowest-cost natural gas producers. This company excels operationally and strategically. Its exposure to natural gas is high, at almost 90%. Peyto stock will skyrocket if and when natural gas markets strengthen.

Motley Fool: The bottom line

Warren Buffett has perfected patience in investing. The rewards are huge if we just remain patient. Having a long-term frame of mind goes hand in hand with this. Wait for your companies to fulfill their potential. And, of course, choose wisely.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Karen Thomas owns shares of ENBRIDGE INC and PEYTO EXPLORATION AND DVLPMNT CORP. The Motley Fool owns shares of and recommends Enbridge.

More on Energy Stocks

Arrowings ascending on a chalkboard
Energy Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Canadian Natural Resources stock is well set up to beat the TSX as it continues to generate strong cash flows…

Read more »

energy industry
Energy Stocks

2 TSX Energy Stocks to Buy Hand Over Fist Now

These two rallying TSX energy stocks can continue delivering robust returns to investors in the long term.

Read more »

green energy
Energy Stocks

1 Magnificent TSX Dividend Stock Down 37% to Buy and Hold Forever

This dividend stock has fallen significantly from poor results, but zoom in and there are some major improvements happening.

Read more »

oil tank at night
Energy Stocks

3 Energy Stocks Already Worth Your While

Here's why blue-chip TSX energy stocks such as Enbridge should be part of your equity portfolio in 2024.

Read more »

Solar panels and windmills
Energy Stocks

1 Beaten-Down Stock That Could Be the Best Bet in the TSX

This renewable energy stock could be one of the best buys you make this year, as the company starts to…

Read more »

Dice engraved with the words buy and sell
Energy Stocks

Is Enbridge Stock a Buy, Sell, or Hold?

Here's why Enbridge (TSX:ENB) remains a top dividend stock long-term investors may want to consider, despite current risks.

Read more »

Gas pipelines
Energy Stocks

If You Had Invested $5,000 in Enbridge Stock in 2018, This Is How Much You Would Have Today

Enbridge's high dividend yield hasn't made up for its dismal total returns.

Read more »

Bad apple with good apples
Energy Stocks

Avoid at All Costs: This Stock Is Portfolio Poison

A mid-cap stock commits to return more to shareholders, but some investors remember the suspension of dividends a few years…

Read more »