The Balance Beam of Investing: Why Patience Trumps Action
When it comes to investing, the wisdom of seasoned professionals such as Howard Marks and Charlie Munger offers insights that can transform how we approach investing. The essence of their advice is simple yet profound: in investing, patience often pays off more than constant action.
The Temptation of Action
Those with a background in high-paced environments such as startups, are wired for action. The hustle mindset is deeply ingrained. It's what drives innovation, fuels growth, and keeps companies ahead of the curve. But when it comes to investing, this same action bias can be costly.
Imagine a 300-pound football player attempting Simone Biles' balance beam routine. The results would likely be disastrous. The skills that make someone successful on the football field — strength, aggression, constant motion — don't translate well to the precision required on the balance beam. The same is true for founders transitioning into the world of investing. The quick decision-making and constant activity that served them well in the startup world can become liabilities in the investment world.
The Power of Patience
Howard Marks captures this difference perfectly in a memo he wrote to his clients:
"Don't just do something; sit there."
The idea is that in investing, the real gains are made not by frequent buying and selling, but by holding onto good investments over time. It's about resisting the urge to constantly adjust your portfolio and instead allowing your investments to grow and compound on its own.
Charlie Munger echoes this sentiment with his famous quote:
"The big money isn't in the buying and selling, but in the waiting."
The key to investing isn't found in the number of trades you make, but in the quality of the decisions and the patience to see them through.
Putting it into Practice
At Finzig, we understand the importance of these principles. Our backtesting platform is designed to help you analyze the long-term performance of your portfolio. By providing you the tools to simulate different strategies and see how they would have performed, we help you develop a mindset where patience and informed decision-making are your greatest assets.
In the end, investing is like balancing on a beam. It requires a steady hand, a clear mind, and the discipline to stay the course. So next time you're tempted to "do something" with your portfolio, remember the wisdom of Marks and Munger: sometimes the best move is no move at all.
This perspective on investing can be a game changer, especially for those transitioning from high-paced environments. As you continue to build your investment portfolio, consider adopting this approach and using Finzig to guide your decisions. After all, in the world of investing, it's the waiting that wins.