True investors think in terms of decades: How can one become patient capital like Baillie Gifford, a century-old asset management giant?
Over the past 100+ years, the asset management industry has witnessed the growth of numerous successful investment institutions. Berkshire Hathaway, Fidelity, Vanguard Group, Bridgewater Associates, Renaissance Technologies, BlackRock... They have all left unique marks in the history of modern asset management with their respective investment philosophies.
Baillie Gifford is one of them. It is hailed as the "global super-growth stock hunter", accurately betting on well - known technology industry giants such as Tesla, NVIDIA, Google, Amazon, Netflix, Alibaba, ByteDance, Tencent, Meituan, and CATL. The long - term global growth strategy flagship product of this low - key investment institution has not only outperformed the S&P 500 index but also outperformed Berkshire Hathaway under Buffett's management.
How did Baillie Gifford achieve this? The world's first work to unveil Baillie Gifford's investment secrets, The Way of Baillie Gifford's Investment, presents Baillie Gifford's investment philosophy and core strategies in all aspects, and reveals one of Baillie Gifford's investment codes: patience.
Written by Li Zheng and Han Shenghai
Publisher: Cheerful Reading Culture/Zhejiang Education Publishing House
November 2025
Baillie Gifford's patience can be traced back to its motto: "True investors think in terms of decades, not just a few quarters."
Patience is not an innate human trait. The evolutionary process reminds us that our human ancestors were mostly hunters and gatherers for most of the time, thinking in terms of spring, summer, autumn, and winter. More than 10,000 years ago, some people became farmers, and the thinking time was extended to one year. In the modern industrial era, with a longer life expectancy, humans need to plan for more than 10 years. However, this era is negligible compared to the long history of humanity.
From an economic perspective, the premise of "patient capital" is to recognize the heterogeneity of capital. Heterogeneity leads to different expectations of investment return periods. Richard Deeg and Iain Hardie define patient capital as equity or debt investment that allows a company to respond to short - term financial interests without sacrificing long - term returns.
Baillie Gifford's Investment Philosophy
Baillie Gifford sees itself as a long - term corporate owner on behalf of its clients. Patient capital is reflected in two aspects: On the one hand, be patient when encountering setbacks. Even superstar companies rarely have a straight - line development process. Don't let fluctuations drive you out of superstar companies. On the other hand, be even more patient when things are going well. The significance of superstar companies is that they can increase in value by more than five times, or even more. If you sell your stocks after the stock price doubles, you will destroy the super - return value they contain.
Most institutional investors recognize patient capital, but it is easier said than done. Most capital has to pursue short - term returns for various reasons. In recent years, the average holding period of stocks in major global stock markets has been less than half a year, and the holding period in Asian capital markets is even shorter. However, for patient capital, this is actually an opportunity, making it more likely to succeed in a market dominated by short - termism.
Returning to the first - principle of investment, investment is a continuous process over time, aiming to maximize investment returns over time. Patient capital also needs returns. Without returns, capital will have no motivation for any investment, regardless of the time horizon. Since returns are needed, patience alone is not enough. We also need concepts, methods, product structures, corporate architectures, and corporate cultures that encourage patient capital, and build patience on the basis of realistically foreseeable returns.
The Long - Term Law and Delayed Gratification
Chen Danran, a scholar in the Qing Dynasty, once said: "Those who do not plan for the long - term are not qualified to plan for the short - term; those who do not plan for the overall situation are not qualified to plan for a specific area." This is similar to Baillie Gifford's investment philosophy that combines a global perspective and long - termism. Baillie Gifford's "patience" is mainly reflected in its long - term global growth strategy, holding most of its investment targets for 5 - 10 years or even longer. There are always many reasons to explain the success of outstanding companies after they have grown from obscurity to greatness. However, when Baillie Gifford invested in these companies, there were many "problems", and investors were skeptical, with the future of these companies being uncertain. As Anderson said: "Every excellent investment may seem like a straight exponential growth line from the bottom - left to the top - right on the compound - interest graph, but in reality, it is full of ups and downs and hardships."
Baillie Gifford invested in Amazon in 2004. After the dot - com bubble, Amazon's stock price once dropped by more than 90%, and the company continued to make losses. However, the growing number of users, emerging new businesses, and the "Day - one" spirit were all visible to the outside world. Baillie Gifford first invested in Tesla in 2013. When Tesla launched its mass - produced Model S in the European market, few people believed that new - energy vehicles could become the mainstream. Moreover, production capacity issues severely restricted Tesla's delivery ability, and its autopilot function also had frequent problems.
Both Amazon and Tesla had great uncertainties in their development prospects at that time. Their huge R & D investments were difficult for many investment institutions to understand. Investing in them required not only courage but also the ability to deduce and imagine the future. European and American fund managers attach great importance to risk management and try their best to avoid losses and uncertainties. However, the economic environment and the market are changeable, complex, and full of uncertainties.
An academic study shows that most people dislike losses at least twice as much as they like equivalent gains. For fund managers, internal and external industry pressures will magnify this ratio. If they want to obtain equal or excess returns, they must be willing to accept losses and make large - scale single - investment in investment targets with a high probability of winning. Otherwise, it is difficult to be a winner.
Baillie Gifford's investment philosophy holds that trying to be accurate and safe is actually the enemy of investment. In the minds of long - term investors, it is difficult to infer the future based on the past and the present. However, this does not mean that the future is unpredictable. Long - term investment is not about waiting for compound interest to occur without a basis. One way to find excellent growth - oriented companies is to identify the certain long - term development trends of an industry even when you cannot determine every exact detail or time.
Baillie Gifford focuses its research on establishing a long - term research system plan and building information sources including scientists, scholars, and entrepreneurs. Scientists and scholars think about changes over 10 - 20 years or even longer, providing Baillie Gifford with a matching information advantage from a long - term perspective and increasing the probability of finding companies with extraordinary returns.
In the technology - changing industries where Baillie Gifford has heavy investments, there are several underlying laws, including Moore's Law, Flatley's Law, and Wright's Law, corresponding to the long - term structural changes in the information technology, medical, and new - energy fields respectively. The common feature of these laws is that the progress in a single year may be disappointing, but when the time is extended to 10 years or longer, the industry can grow at a predictable rate. Companies that build their businesses in line with industry trends will create great value and are suitable for long - term investment.
Moore's Law was concluded by Gordon Moore, the co - founder of Intel, in 1965: The number of transistors that can be accommodated on an integrated circuit will double every 18 - 24 months, and the performance will also double. As the semiconductor industry becomes more efficient and the cost becomes lower, the impact of Moore's Law is permeating all aspects of people's daily lives.
Similar to Moore's Law, Flatley's Law was proposed by Jay Flatley, the former CEO of Illumina. It means that the progress of human genome sequencing will be faster and the cost will be lower. A team of six - country scientists spent about 15 years and over $3 billion to complete the first human genome sequencing. Now, in the fastest case, the sequencing work can be completed within a day, costing only a few hundred dollars, and the cost is still decreasing. Flatley's Law has brought revolutionary changes to the medical field, enabling gene sequencing technology to be more widely used in clinical diagnosis and treatment.
In the new - energy field, there is Wright's Law summarized by American aeronautical engineer Theodore Wright in 1936. That is, when the aircraft production doubles, the cost will decrease at a specific rate. This law has also been verified in the field of electric vehicles. Ray Kurzweil, the author of The Singularity Is Near, calls a similar law the "Law of Accelerating Returns", that is, a certain type of technology creates and accelerates an innovation feedback loop, making innovation itself easier. From the pickaxe to the plow, from the steam engine to the telephone, from the automobile to the airplane, the birth and spread of each technology follow similar laws. The long - term interaction between technology and application breeds new knowledge and new technologies, which then continue to develop, strengthen, and recombine, promoting the progress of civilization.
In Baillie Gifford's view, the long - term change trends of industries subject to the Law of Accelerating Returns are certain. Companies that possess or are good at using technological advantages are the focus of Baillie Gifford's attention. In essence, it is the Law of Accelerating Returns that drives market returns, and the returns of patience are certain. Even though the long - term trend is clear, patient capital will still be attacked by ubiquitous "value destroyers" in the process of generating long - term returns. Anderson metaphorically said: "Ancient fortresses were attacked by fire, sulfur, and plague, while modern fund managers are attacked by excessive information, quarterly earnings, market sentiment, and brokerage reports." For patient capital, the famous quote of existentialist philosopher Jean - Paul Sartre, "Hell is other people", is the best annotation for "value destroyers".
The capital market is flooded with information, including countless news, analyses, and expert predictions. A large number of studies in social psychology and behavioral economics show that humans have a herd mentality and over - emphasize short - term information. Although in hindsight, short - term information has little value other than providing immediate emotional value, the fear of missing out makes people unable to stop chasing short - term information.
Baillie Gifford further believes that seller reports, the media, or other information intermediaries all have their own business motives. For example, self - media is good at attracting attention, and they know that bad news is more attractive. Audiences are easily influenced by it and fall into a negative mood. Therefore, before accepting information, one should know the business model and incentive system of the information provider. Only by understanding the "what" can one understand the "why".
Information interference is an obstacle that patient capital needs to overcome in the decision - making process. For example, the team of Baillie Gifford's International Concentrated Growth Fund holds no more than one formal meeting per month. The decision - making mechanism focuses on the long - term development of the company rather than reacting to immediate information flows and quarterly performance. Real - time information cannot provide differentiated insights. Baillie Gifford hopes that its employees will go out of the office and meet smart and interesting people to obtain new information and knowledge rather than sitting in the office staring at the computer.
To some extent, Baillie Gifford refuses to predict short - term earnings, cash flows, or stock prices not only because linear prediction cannot screen out companies with extraordinary returns. Anderson even believes that certainty is a low - level temptation, and striving for correctness will interfere with correct decision - making. In addition to information, trading emotions can also affect market valuations, putting pressure on investors and forcing them to trade under pressure. However, good companies usually take a long time to reflect their value in the market.
In the late 1960s, Professor Walter Mischel of Stanford University conducted a famous marshmallow experiment on delayed gratification. The researchers gathered a group of about 4 - year - old children in a classroom, asked them to sit quietly for 15 minutes, and placed a marshmallow in front of each child. They could eat it immediately, but if they waited for 15 minutes until the staff came back, they could get a second marshmallow. As a result, only about 30% of the children successfully got two marshmallows. The researchers tracked all the children who participated in the experiment and found that the children who got the two - marshmallow reward were more successful in later years. Mischel interpreted the experimental results as follows: People with a high ability to delay gratification are willing to give up short - term interests for a more valuable future.
Baillie Gifford's patience is also a form of delayed gratification, not being disturbed or tempted by the short - term market for long - term returns. Because of the potential for extraordinary future returns, they are very willing to pay the cost for a company, which includes both an unreasonable price and extremely long - term patience.
Both Buffett and Munger have the psychological characteristic of delayed gratification. Someone asked Buffett: "Your investment system is so simple. Why don't people just copy your approach?" Buffett replied: "No one wants to get rich slowly." Munger believes that on the road to investment success, "what is needed is not a large number of actions but a large amount of patience. You must adhere to your principles and seize opportunities when they come."
A long - term assessment and incentive mechanism is also a standard feature of patient capital. Whether in foreign countries or in China, few fund managers can tolerate two or three years of poor performance. In addition to facing the pressure from investors who want to make money immediately, they also have to be evaluated by the company's short - term evaluation system. Such an environment cannot nurture patient capital.
Baillie Gifford has cancelled quarterly performance evaluations and conducts performance evaluations over a period of 5 - 10 years, encouraging long - term investment from a mechanism perspective. Anderson even believes that the most important change Baillie Gifford has made as a whole is the cancellation of quarterly performance evaluations. In addition, Baillie Gifford's headquarters also has a salary deferral system, allowing employees to invest part of their salaries in Baillie Gifford's funds. The incentive mechanism is also in line with patient capital.
——This article is selected from The Way of Baillie Gifford's Investment, written by Li Zheng and Han Shenghai, published by Cheerful Reading Culture/Zhejiang Education Publishing House in November 2025
The world's first authoritative work to unveil Baillie Gifford's investment secrets
Present Baillie Gifford's investment philosophy and core strategies in all aspects
See how a century - old patient capital makes accurate bets
Tesla, NVIDIA, Google, Amazon, Netflix,
Alibaba, ByteDance, Tencent, Meituan, CATL
Returns in the past 20 years have outperformed Berkshire Hathaway