Delayed Gratification… Forty years ago researchers at Stanford University were trying to pinpoint the age when delayed gratification kicks in. They thought it was about four years of age. They tested over 500 four-year-olds at Stanford’s childcare facility. A child was left alone with nothing to do in a room with one Oreo cookie. The child was given two choices: They could eat the cookie at any time or they could wait 20 minutes and get two cookies.

There was a wide dispersion in how long the children could wait. The data was useful in confirming the premise of the study and the researchers went on to other projects.

Years later, by accident, one of the researchers heard that a few of the children in the study happened to be in school with his children. In conversations with his children, he found that a couple of the participants were struggling and a couple were successful. He remembered the students and that the struggling students were among those who could not wait to eat the Oreo and the successful students fell into the patient group. A follow-up study was born. A review of the SAT scores found a strong correlation between patience and success.

In discussing this study with my wife Marianne, a psychiatric social worker, she pointed out that trust was also a key ingredient. The child had to trust that the adult would actually live up to the deal. A light went on in my financially oriented mind. Here was the combination that leads to success in investing.

The lesson for me is that you need two mindsets to invest successfully: Deferred Gratification and Trust. Deferred gratification allows for long — term investing. All evidence has led to the conclusion that long-term investors outperform with less effort.

In this context, the trust that is most important is the trust that the country, the economy, and the market will recover from any setbacks. We are also optimistic about the future. Sometimes it is hard. When times are bad, I think of two old sayings: “When all else fails, men will be reasonable,” and “This too shall pass away.” I do not think I need them yet, but I have them ready.

Sincerely,

Katz Family Financial