The last part of Buffett’s 1957 letter carries a very important lesson in patience for value investor. Here is what he wrote…
To some extent our better than average performance in 1957 was due to the fact that it was a generally poor year for most stocks. Our performance, relatively, is likely to be better in a bear market than in a bull market so that deductions made from the above results should be tempered by the fact that it was the type of year when we should have done relatively well. In a year when the general market had a substantial advance I would be well satisfied to match the advance of the Averages.
Despite calling ourselves “value investors”, a lot of us lose patience when stock prices are falling and get elated when they are rising.
This is simply because when you are value investor, you buy good quality stocks and that too only at reasonable margin of safety (around 30-50%).