You don’t need to swing at every pitch for good returns

A lot of the best businesses in Australia are trading at very high multiples. This time last week Altium Limited (ASX: ALU), REA Group Limited (ASX: REA), a2 Milk Company Ltd (ASX: A2M) and Treasury Wine Estates Ltd (ASX: TWE) were all trading at high multiples, they were almost priced for perfection. The latter two have come down a bit this week.

I think it’s important for all investors to remember that investing isn’t a ‘race’. The harder you try to create big returns the more likely you are to shoot yourself in the foot.

As investors, we can wait for the right investment opportunity to come along. We don’t have to act on a ‘fear of missing out’.

Warren Buffett has an excellent analogy for this concept. He essentially says that investing isn’t like baseball. In baseball the batter has to swing at the ball if it’s pitched in the strike zone, even if it’s just on the edge on the strike zone. However, Warren Buffett can sit there all day long and watch pitches (investment ideas) go by. He only jumps on the ones that are really good deals.

There’s nothing wrong with waiting for a better value investment to come along. Shares are not always trading at all-time highs. There will be a time in the future when one of your favourite ideas is better value again.

Patience is extremely important in investing. Patience means giving your investment the time it needs to fulfil the thesis. Patience also means giving the market time to spring up an opportunity for you.

Foolish takeaway

When the market is so highly valued like it is now I think it’s completely okay to wait many weeks (or longer) for the right opportunity to come up. If you buy at a too-high price you could be nursing a paper loss for a while.

That’s why I think this top stock is such a good opportunity, it’s predicting profit growth of 30% this year yet is trading at good value.

OUR #1 dividend pick to grow your wealth over the new financial year is revealed for FREE here!

Financial year 2018 is here and The Motley Fool’s dividend detective Andrew Page has revealed his must buy dividend share to grow your wealth in 2018.

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia owns shares of A2 Milk and Altium. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!