In praise of idleness

When the economy is in the tank and the stock market is down 40% and going nowhere, there is a great temptation to do something--anything--to improve short-term results. This is almost always folly.

In almost any field, action is the mark of progress. An architect waiting for inspiration to hit is a slacker. A manager waiting for problems to solve is a buffoon.

But, an investor who doesn't trade frequently is an enigma. He's seen as being a slacker buffoon, but in reality may be doing a lot of thinking and research, and deciding that acting is a poor choice.

You see, stock market prices move much more than underlying values. Any attempt to chase these almost random price movements leads to poorer returns than doing nothing.

Because the common paradigm is that activity equals progress, most people are confused by an investor who isn't trading. When things aren't happening, progress doesn't seem to be achieved. Right?

That's why idleness in an investor is virtue. Doing research, comparing alternatives, watching underlying fundamentals of current investments, but infrequently trading denotes a capable investor.

Frequent trading is like chasing fog: a lot may seem to happen, but little is achieved.

Patience is truly a virtue in investing. If you've invested in the right businesses at the right prices, the best thing to do is not to trade.

Research alternatives? Yes. Study more deeply current holdings? Yes. But, don't mistake such work, and lack of trading, for lack of progress. In this case, idleness is praiseworthy.

Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.