Zweig's Market Survival Guide

There’s a lot of talk among investors about beating the market, but in a recent Wall Street Journal article  Jason Zweig suggests that many overlook the challenge of merely surviving it. “Of all the qualities an investor needs to succeed,” he writes, “stamina may be the most underrated.”

Zweig cites Morningstar data showing that of the 525 U.S. stock mutual funds that existed thirty years ago, 223 are still operating today (of those, only six are run by the same manager). In recent conversations with some of what he calls “investment marathoners,” he says a common theme in their approaches is a tendency to “trot” rather than “sprint,” with patience being paramount.

John Rogers, Jr. of Ariel Fund ($2 billion in assets) told Zweig that patience requires “not chasing bubbles and not getting fearful during the crises.” Mario Gabelli of Gabelli Asset Fund ($2.6 billion) said, “We love to watch paint dry and turtles race,” adding that he and his analysts spend years studying a handful of industries to gather “accumulated and compounded knowledge.” This approach is supported by the fact that his fund holds 1.8% of its assets in an automotive-equipment distributor he first analyzed in 1968. He says he has seen “a lot of resilience and stability in their business.”

Zweig advises investors to cultivate patience. “It seems to be a law of finance that investors who try to sprint their way to wealth never make it to the finish line; somehow, the last in are always the first out.”