The other day, I saw this tweet from Nassim Nicholas Taleb where he was talking about vacations: Don’t go to resorts where you meet “achievers” on commoditised vacation actively trying to relax. Go to villages (preferably your village of origin) and interact with locals who can teach you how to do nothing when there is nothing to do.
While this is no doubt true about the vacations some people take, the most interesting part is actually even more relevant for investors and that’s the phrase ‘how to do nothing when there is nothing to do.’
Doing nothing is an activity which is not normally associated with success in anything. In fact, it is associated with laziness and failure. That’s probably true for most things in life, except not in investing. It’s true for employees, for students, for sportspersons, for politicians and certainly while driving on Indian roads. Therefore, we sort of assume that it must be true in savings and investments.
Think about what activities would normally be associated with investing. I guess most people would think that investing consists of activities like studying investments, choosing them, monitoring them, looking for new ones, weeding out old ones and so on and so forth. That’s a lot of things to do. If you have 10 or 20 investments (and many people have more) it could almost be a full time activity.
This whole idea of continuous action is actually quite misguided. When I think of the actual activity that should take up most of the time of investors, then it should be nothing. For most—almost all—of the lifetime of an investment, you should be doing nothing about it. The bulk of the activity (although that’s not the right word) of investing is waiting. Waiting for months and years while your investment grows, powered by the monthly dripirrigation of your SIP installments.
“For most—almost all—of the lifetime of an investment, you should be doing nothing about it. The bulk of the activity of investing is waiting”
— Dhirendra Kumar
The problem is that there are far too many people who are actively trying to persuade you otherwise. Indeed, their livelihood depends on it. Much of the investment advice industry is focused on giving you the impression that investing consists of doing things, and investors who do more things will earn more. Somewhat counter-intuitively, this is not true for investing. Investors who think that this is true act when they shouldn’t and do worse than others. As someone said, a bored investor is a dangerous thing.
One driving factor behind this action is also the investment entertainment industry, which claims to be the investment news media. The impression they try to create is that short-term events matter to investors. This is simply wrong. They do not. I get a lot of mail from people asking me for investment advice and for ways out of their investment problems. The problems always arise out of things that the investor did or didn’t do over many years and sometimes decades. Not just that, solving those issues always involves taking actions that need to be sustained over years. I never come across someone who has problems with an investment portfolio because he or she didn’t stay glued to the breaking news and react to events rapidly. Rather, the very opposite is true. Many investors do badly because they pay too much attention to the news and react too much to events, well in advance of the real purport of those events becomes clear.
We are currently living through the biggest proof of this phenomena that we have seen in our lifetime. Since February 2020, the apparent impact of covid on your investments has changed course rapidly. Investors who acted precipitately ended up doing badly through their actions. Unless there was some huge and glaring anomaly in your investment portfolio, very little needed to be done.
The great Charlie Munger put it best last year. Despite $125 billion in cash and assets at rock bottom pricing, Buffett and Munger were sitting on their hands. Nothing tempted them. As Munger said about covid, “This thing is different. Everybody talks as if they know what’s going to happen, and nobody knows what’s going to happen.”
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
