Day Trading vs Patient Capital

In his Akimbo podcast, Seth Godin teaches us how to adopt a posture of possibility, change the culture, and choose to make a difference. Here are my takeaways from the episode.

In this podcast, Seth discusses culture change via the day trading way and the patient capital approach.

The day trading way permeates many aspects of our culture. Take the short-term, profitable actions and not thinking about the repercussions of the actions we are making. The goal is to buy low and sell high by doing it day after day.

The alternative is patient capital, as coined by Jacqueline Novogratz. Patient capital invests now but for the long-term benefits. It turns out that, when we make investments in a system, the system acts differently. If we invest patiently while still using the mechanism of capitalism at our side, what change could we possibly make?

The examples of Western Seed and d.light have shown how patient capital can work. When we invest patient capital in a community, it can start to change things. Over time, the norm in this community will change when people start to commit to doing things via the new way.

After the people see the benefits brought on by the change, people will start to make new commitments that make new changes possible. And the patient capital ratchet continues to turn because the culture in the community begins to change.

Patient capital is not a charity and can expect a return on investment like any other business venture. It is not making a profit that would make a day trader happy, but it is making a profit, nonetheless. Over time this patience begins to pay off for a community and produces far more value in the long run.

Day trading’s mantra is getting anything we want without regard to how it will impact other people. Patient capital works more like how Zig Ziglar had described, “You can get everything you want if you’ll just help enough other people get what they want.”

Day trading operates on the assumption that its universe is a zero-sum game. For every trade that wins for someone, there must be someone else losing the money. That is how the equity market works.

Patient capital’s rule is fundamentally different. It is only zero-sum if we are impatient. If we bring patience to the equation, we will help others and might help ourselves in the process. If we can create a culture where technology appears not to belittle or enslave other people but to create more abundance and less scarcity, we play a different game.