New Book Alert: The Long Game is Available Now
My new book, The Long Game, is available now. The book contains reflections from 30 investors who’ve survived decades of market cycles. You’ll learn how to tune out the noise that makes you second-guess yourself, handle the fear and greed that hurt your decisions, and stick to principles that actually compound wealth over time.
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For centuries in Indian villages, the highest form of charity a person could offer was not gold, not land, not even money. It was a cow, and the act was called Gau-daan or the gift of a cow.
Think about why. A healthy cow is not a one-time gift. It is a small, living business. It produces milk daily, some of which is for the household while the remaining is to sell. Its offspring are assets, too. A male calf helps plough the fields, while a female calf grows up to produce more milk. Even its dung has practical value as fuel. In other words, the cow generates a stream of returns across its entire lifetime.
So, the gift of a cow was not just generosity but the gift of an income-producing asset. It’s like the difference between feeding a man for a day and feeding him for life.
Now, my question for you is this: when a village somewhere in India was experiencing a drought and when people were anxious and afraid, did the cow stop producing milk?
The answer is no. It kept producing. Regardless of the weather outside.
Some 13,000 km away from those Indian villages, in Omaha, Nebraska, in 1986, a middle-aged Warren Buffett may have never heard of Gau-daan, but when he bought a 400-acre farm that a failed bank was desperate to unload, he was doing precisely what that ancient Indian tradition had always understood about value.
A bank had failed. Its assets were being liquidated. Among them was a 400-acre farm. Just a few years earlier, the bank had lent heavily against it, and at prices that, in the frenzy of the farm boom, had seemed reasonable. Now, in the aftermath of the bust, nobody wanted it.
Buffett bought the farm for $280,000.
He knew nothing about farming. So he called his son who understood farming, and asked two questions. First, how many bushels of corn and soybeans will this land produce each year? And second, what will it cost to run? From those two numbers, he worked out that the farm would return roughly 10% on his investment annually and, more importantly, reliably, year after year.
That was enough. He bought it.
He then stopped paying attention to the price of the farm. He had bought the farm’s capacity to keep producing regardless of what the headlines said. After all, corn and soybeans do not know what markets are doing or what geopolitical analysts are worried about. They just grow. And that was the only fact that mattered to Buffett.
Nearly forty years later, Buffett still owns that farm. When he last shared the details, earnings have more than tripled and market value has grown five times over. But none of that appreciation was what he was thinking about the day he bought it.
Anyway, seven years later, Buffett made a second investment of the same kind. This time, it was a commercial building near New York University, picked up from a government body liquidating the assets of failed savings institutions. The building was undermanaged and partially vacant. But Buffett noticed that NYU had been in Greenwich Village since 1831 and was not going anywhere. He also noticed that the building’s largest tenant was paying $5 per square foot in rent while the surrounding market charged $70. That lease would expire in nine years. When it did, the income would correct itself because anomalies don’t last forever.
He bought it and then waited. The lease expired, and the income jumped.
Now, what I find most worth reflecting on in both these stories is not the returns. It is where Buffett’s attention was, and where it wasn’t. He was not watching commodity prices when he bought the farm. He was not anxious about interest rate cycles when he bought the building. He was asking one question about each asset: what will this produce, and for how long, and how certain can I be about it? Everything else, to his mind, was just weather.
There is a phrase Buffett uses that I have never been able to improve upon. He talks about the difference between watching the playing field and watching the scoreboard. Speculators watch the scoreboard which shows the daily price and the mood of the market. Investors watch the playing field which shows what the business is doing, what it is earning, and whether its competitive position is intact.
The scoreboard updates every second and responds to every headline and every change in sentiment. It is, in its own way, mesmerising, and so you can watch it for hours without learning anything useful.
The playing field, on the other hand, moves slowly. A business’s earning power does not change much from month to month. Its competitive moat does not appear or disappear with the news cycle. The things that really determine whether a business will be worth more ten years from now are largely invisible to the scoreboard.
The Gau-daan giver understood this intuitively. A cow’s value was never in what someone might pay for it on a given market day. Instead, its value was in what it produced, year after year. The price was just an opinion, while the milk was a fact.
And playing the long game, it turns out, is simply the discipline of never confusing the two.
When you think about it, playing the long game in investing sounds straightforward when described this way. Own good businesses, focus on earnings and not prices, ignore the noisy weather, and just wait. But anyone who has actually tried to do this knows that it is one of the hardest things in investing. It’s because it’s not just intellectually challenging but psychologically demanding too.
The scoreboard is always shouting at you to act and score well, and people around you are watching it and reacting to it and sometimes making money, or appearing to make money, by reacting to it.
But the long game requires you to trust your careful reasoning and understand that the businesses you own will keep producing long after the fear of any particular moment has been forgotten. It requires you to accept that in the short run, prices can do almost anything, but in the long run, they tend to find their way back to earnings.
This is easy to believe in the abstract. It is genuinely difficult to live through.
I often think about the original Gau-daan giver—the one who, in some village centuries ago, handed a cow to a neighbour in need, knowing that this animal would feed that family not for a day but for years. There was no guarantee in the gift. Droughts came. Animals fell ill. Calves were sometimes lost. The future was uncertain then as it is now.
But the gift was made anyway, on the basis of a simple and enduring truth: a productive asset, patiently held, creates value across time in ways that no one can fully predict and no crisis can permanently destroy.
Buffett understood this in Nebraska. The Gau-daan tradition understood it centuries before him. And the investors who will look back on their investing lives without regret are the ones who understand it now.
The cow doesn’t care about the news. It just keeps giving milk.
The question is only whether you are patient enough to let it.
If these ideas resonate with you, my new book The Long Game explores them further, through the stories of thirty investors who have lived this philosophy across market cycles and decades.
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