Good morning!

As politicians bicker over the debt ceiling and bring the U.S. to the brink of default, it's worth remembering that investing isn't an event. It's a lifelong, continuous process.

I've been thinking a lot about patience lately, even more than I usually do.

In "Picking a Stock for the Year 2048," I wrote about student investment funds at the University of Virginia and Delaware State University. Thomas Gayner, chief executive of insurer Markel Corp., has challenged these college students to pick a few stocks and hold them — no trading allowed — for the next-quarter century.

What I love about this idea is that it forces you to think differently. A Rip van Winkle portfolio, in which you invest, then fall asleep and do nothing for decades, is probably too static to be realistic in a dynamic world.

But what if you couldn't make any trades until 2048? Wouldn't you do a lot more thorough research and think much longer and harder before you bought anything in 2023?

In our last issue, I asked:

Do you own any stocks that you plan to hold for at least a quarter of a century? How did you identify them? Why (other than their past performance) do you think they are likely to be winners into the long-term future?

I got to know Vinci S.A. as I drive at least twice a year from Italy to Spain and back. I found it has a strong business in infrastructure construction and management worldwide and it seemed to me it has a good moat against competitors.

—Paolo Roccoli, Savignano sul Rubicone, Italy

Palo Alto Networks. Cyber security is not going away.
—John Palguta, North Royalton, Ohio

I have held Boston Scientific for almost 25 years with no plans to sell. It has a great track record and allows me to make a technology and biomedical investment all in one.
—Max Moss, Nashville, Tenn.

I think Gildan Activewear is a great stock....They're not only already the lowest-cost producer, but also have the highest profit margin in their peers, and [moving production to] Bangladesh will only expand the gap between them and the competitiors.
—Tanmay Mandot, New York

PPG Industries. It has paid a dividend every quarter for over one hundred years.
—Linda Garey, Doylestown Ohio

I am planning to hold Blackstone not only for the next 25 years but forever. To me, the firm is the next best thing to owning Berkshire Hathaway, because [it's] a 'buy-and-hold-forever' business, has a growth mindset without losing sight of value, hires some of the smartest people and, above all else, BX is a firm that learns from its own mistakes.
—Asaad Albaloshi, Jeddah, Saudi Arabia

I’ve owned [Google's parent company Alphabet] for many years. Plan to hold it until I die. My kids will get it. I can’t afford to sell too much of it. LOL.
—Cindy Kanzleiter, Menomonee Falls, Wisc. 

Berkshire Hathaway. Owned it for years. Tax efficient. Buffett’s investment team will carry it on. Planning on leaving my shares to my kids and grandkids.
—Fred Wlodarski, Orono, Maine

I own Costco and never plan to sell....I have never seen it not​ being busy, in multiple locations in multiple states....They could not care less about Wall Street quarterly expectations, and they seem to always do right by their employees and customers alike. A mixture like that is rare and refreshing [and] why I think they will be winners in the long-term future. 
—Jubran Abdallah, Irving, Texas

Is there reason to believe that the long-term winners of the past will remain long-term winners in the future?

You shouldn't count on it.

Studying the world's biggest companies, financial historian Leslie Hannah found that of the top 100 (by stock-market value) in the year 1912, most either shrank or sank into oblivion by 1995:

When I asked the Center for Research in Security Prices at the University of Chicago to tell me the best-performing stocks of the past three decades, a few now-familiar names did come up: Apple, Qualcomm, Starbucks, Lowes.

The list, however, was dominated by companies that were obscure in 1993 -- and it's worth noting that back then Apple wasn't a market superstar either, but was floundering for survival.

Three decades ago, Monster Beverage, AAON, Vector Group, HEICO and Middleby were small fry, with total stock capitalizations of $34 million, $10 million, $55 million, $27 million and $18 million, respectively. They went on to become the five highest-returning stocks between early 1993 and the end of February 2023, with cumulative gains from 42,683% to 108,444%.

Skewing the search toward smaller, already profitable firms with low levels of debt and whose managers own plenty of stock, I constructed a simple stock screen to identify companies that might survive and thrive until 2048:

• stock-market value of at least $250 million, to capture all but the most microscopic firms;
• return on equity (a basic measure of profitability) of at least 15%;
• debt not exceeding 25% of capital;
• inside ownership of at least 10% of shares outstanding.

This way, instead of settling on companies you already know are dominant, you reverse-engineer for the qualities dominant companies are likely to share.

I came up with 694 firms, most in China and other emerging markets. The results also included such U.S.-traded outfits as workplace-safety provider Brady Corp., clothing manufacturer Columbia Sportswear, portable-device maker Garmin, homebuilder D.R. Horton, nuts-and-snacks producer John B. Sanfilippo & Son and trucker Old Dominion Freight Line.

But these are raw screens. If you're buying with the intent to hold for years and decades, you'd better do more than a few minutes of research -- or relying blindly on a stock screen. I don't want you coming after me in 2048, complaining that I steered you wrong!

Study the companies' financial statements, how the executives get paid and how much stock they own. Research their suppliers and competitors. Test their products. Don't buy the stock if it's at a crazy multiple of earnings.

Even if you have no intention of holding for 25 years, though, framing the decision as if you will should help you make better, more patient, more durable choices.

Can you even find the figure of Patience in this image?

She's in the exact lower center of the scene, chained to a big stone block, praying quietly, almost invisible and surely inaudible in a world gone mad.

Next to her, a woman with a dog's body spoon-feeds a goose on the back of a crippled man being attacked by a winged platypus.

Frogs, a medieval symbol of greed, hop and hulk everywhere; many of them have crossbred with other species, engendering frog-dogs, frog-flies, frog-birds and frog-men.

A village in the background is incinerated in a huge fire, a giant egg-shaped man's head is ablaze, a tiny bird roasts above an enormous smoky fire.

You can almost hear the creatures shouting to be heard over the squalling of violins and guitars and horns and harps, the hissing of fires, the roar of a flying lizard, the cries of drowning men and the flatulence of weird monsters mooning each other.

The caption, by the early Catholic theologian Lactantius, reads:

Patience is the bearing with equanimity of the evils which are either inflicted or happen to fall on us.

Lactantius added:
Therefore the just and wise man, because he exercises virtue, has patience in himself; but he will be altogether free from this if he shall suffer no adversity. On the other hand, the man who lives in prosperity is impatient, and is without the greatest virtue. I call him impatient, because he suffers nothing.

Getting what we want makes it difficult to wait for what we don't have. No wonder being patient is so hard.

The Latin pati, "to suffer," is the root not only of our word patience but also the medical term patient. To be patient and to be a patient are the same, linguistically and perhaps psychologically as well.

To be a long-term investor, you have to be patient. And that means you have to be prepared to outlast some suffering. To survive, as Bruegel shows, you have to tune out the noise and look away from the madness.

Be well and invest well,

Jason

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In the stock market, money is not made with the head, but with the butt.
—André Kostolany