Patience plays an important role in determining investment returns according to Dr. Peter Brooks, head of behavioural finance at Barclays, who focuses on how investor behaviour is affected by market conditions.

During a breakfast seminar with Barclays corporate clients at The Claremont Hotel, Douglas, Dr Brooks shared insights into why business owners’ reactions to markets can be costly and don’t necessarily follow traditional theories of finance.

He said: ’The patient business investor is likely to set up a long-term buy and hold strategy, while the impatient business investor will seek more immediate investment returns - potentially by trading more frequently or backing their investment skill to help them move to the best investments.’

On the other hand, he added, impatience can ’lead to higher transaction costs, the wrong decisions at the wrong time and lack of diversification.’

Dr Brooks noted that it appears that businesses are becoming more impatient when it comes to their investments.

It was pointed out that Andrew Haldane, chief economist at the Bank of England, in recent years, had shown evidence for shorter holding periods on stocks over the last 20 years.

Also greater turnover in company chief executive officers as investors seek immediate performance and increased volatility in markets because of greater numbers of high frequency traders.

Dr Brooks added: ’Impatience seems to be dominating our collective investing behaviours.

’This may be due to the increased information available on markets and individual companies.

’Perhaps also, those markets are more liquid and dealing charges are much lower.’

Being prepared for market events, which may bring about business owners’ impatient side, is not enough to stop the effects being felt.

Dr Brooks also added that it’s important for businesses to plan how they may react during a stock market tumble to limit its damage.

’The option for seeking instant gratification from investments now exists, however, the instant gratification could have both financial and emotional costs,’ he said.

Employing a long-term investment strategy will help to filter out short-term noise created by markets and political events, which can affect perspective.

’In our experience, it is time invested in the market, and not market timing, which is the greatest contributor to long term performance,’ concluded Dr Brooks.