Do Nothing
Most people have high regard for Warren Buffett, Chairman of Berkshire Hathaway. For decades he and Vice-Chairman Charlie Munger have been making quite a bit of money for those lucky enough to own a few shares of their enterprise. They’ve been so successful that the annual meeting these low key, self-effacing billionaires hold each year draws tens of thousands of people to Omaha Nebraska, all hanging on the Chairman’s every word.
I once had the good fortune to have lunch with Buffett at the Omaha Club. Actually, he was at the next table so perhaps “with” is a bit of an overstatement. But I did get to say hello and notice his lunch order: tuna fish salad on white bread, potato chips, and a Diet Coke.
The client who was my host told me later that Buffett’s office was in the same building as the club so he lunched there regularly…and always ordered the same thing. I’ve thought about this now and again in the years since that meeting. One of the world’s richest men, idolized by many, happy with a simple sandwich, chips, and a Diet Coke for lunch.
Buffett’s lunch preferences are not the only thing about the man that seems to have remained steady. Many people have dissected his investment style and tried to figure out how he does it. In doing this, they overcomplicate and look for hidden methods. “If the Fed raises rates, what will Buffet do?” “If China starts arresting corrupt executives, what will Buffet do?” “If Punxsutawney Phil sees his shadow what will Buffett do? And if he doesn’t see his shadow?”
The truth is, that through the years as Berkshire Hathaway has become larger and amassed huge profits, Buffett’s “method” has stayed as simple as his lunch. And he has happily shared it with anyone who asks. “When there’s nothing to do, do nothing.”
Unfortunately most people in the investment arena get paid for activity. Even if they are temperamentally aligned with the even keeled and low-key Buffett, they profit from making moves, not from doing nothing. It’s transactions, trades, and deals they revere, the more the better…and the higher the commissions.
Do nothing. So hard for many people whether they get paid for transactions or not. And yet, doing nothing is the right answer more times than you think. Some things take time to gestate, some get better with age, some morph and develop without any action on your part. And some will shrivel up and blow away all on their own thus saving you the trouble of having to kill off bad ideas.
You’ve been trained to take action. We all have. Action is good. Inaction is not. Except when it is. Keep this in mind as your training takes over and you leap to do something without fully thinking it through and figuring out what the best response is. And in case you’re still wondering about his guidance, Buffett has some further advice for you about doing nothing. “When you are right, you can wait indefinitely.”
