The power of patient capital

Sridhar Vembu, the founder of Zoho, recently posted something on X that made me pause and think about investing in ways I hadn’t before. He argued that the era of the Washington Consensus—globalisation driven by Davos-style thinking—received “a mortal blow during the Global Financial Crisis in 2008-09, died during the pandemic and today we perform the last rites.”

What struck me most wasn’t his geopolitical analysis, but his warning about where India’s smartest talent is heading. “We don’t want our smartest talent going into high finance,” he wrote. “We must realise we are borrowing what failed America. It is a colossal misallocation of resources.” He connected America’s obsession with financial engineering directly to both the 2008 crisis and the societal tensions that followed.

This aligns with what we see in Indian investing circles. We’ve developed an unhealthy fascination with “financial sophistication” at the expense of productive, patient capital formation. Walk into any discussion today and you’ll hear elaborate theories about macro calls, derivative strategies and complicated trading set-ups. Meanwhile, the basics—regular investing, diversification and staying the course through market cycles—are dismissed as boring.

Vembu’s insight about talent misallocation mirrors investors’ capital misallocation. Just as America’s brightest minds flocked to Wall Street to design ever more complex products rather than build real businesses, many Indian investors are now chasing financial engineering over productive investment. Consider the parallel Vembu draws with China’s technology pathway. China didn’t build capabilities by perfecting currency trades or hedge-fund strategies. It invested patiently in “boring” areas like advanced metallurgy, composites and manufacturing. That required what he calls “patient capital”—time horizons measured in decades, not quarters.

The same principle applies to personal wealth building, which we seem to have forgotten. Investors who’ve built substantial wealth over the past few decades didn’t do so by timing cycles or decoding global geopolitics. They did it through the equivalent of patient capital: regular investment in diversified portfolios, held through multiple market cycles, letting compounding do the heavy lifting.

Yet our discourse has shortened our horizons. Venture capital’s seven-to-eight-year exits are already too short for national technological catch-up. Retail investors often think in months or even weeks. The outcome is the same misallocation Vembu identifies at the national level—resources flowing to financial manoeuvres rather than productive wealth creation.

Vembu’s prescription—“5–10 year sprints” in deep tech and, in some areas, “10–15 years”—translates cleanly to investing. “Catch-up R&D is not expensive, it is time-intensive.” Building wealth isn’t about starting with enormous sums; it’s about giving compounding the time it demands.

For Value Research Fund Advisor subscribers, the takeaway is practical:

• Stay systematic. Keep SIPs running through cycles; add on weakness rather than pausing on fear.
• Stay diversified and rebalance. Follow your target asset mix and rebalance on schedule, not on headlines.
• Shun financial busywork. Avoid tactical churn, derivative punts, theme-of-the-month funds and constant strategy hopping.
• Measure what matters. Judge progress over rolling five-year windows, not quarters; track plan adherence.

The irony is that by focusing on the truly long term, both nations and individuals often end up with better short-term results too. Companies that invest in R&D rather than financial engineering tend to deliver superior outcomes. Investors who focus on building wealth rather than “beating markets” usually do better as well. That may be the real lesson of the post-Washington-Consensus world: sustainable prosperity—personal and national—requires the patience that markets constantly tempt us to abandon. Our job at VRFA is to keep you anchored to that patience and ensure your plan keeps compounding.

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Also read: Investing is not a game