Morgan Housel, who appears on The One Percent Show tomorrow, tweeted this four years back –
I completely agree with Morgan, and also that ‘shut up and wait’ is one of the sanest advices you will ever receive, and must follow, for wealth creation.
Just that doing this is not that easy.
The idea of buying and holding high-quality businesses over a long period of time is simple. Everyone knows that, and even those who don’t practice it appreciate that this works with most high-quality businesses as history has proven time and again. But then, it’s important to understand that the action of not doing anything over such a long period of time involves hundreds of decisions over months and years that lead to such inaction.
Like this –
Now, one way is to buy high-quality businesses and forget for 20 years and hope to end up with a fortune. There are quite a few such fairy tales you may have heard of. But the other side of the picture is that countless people have also ended with duds in their portfolios, or vanished companies, when they realized their father or grandfather had bought some stocks and forgot about them for 20 or more years.
So, overall, it’s not easy. And it’s not supposed to be easy.
But if you have done your homework well, and keep your eyes and ears open, ‘shut up and wait’ remains the best bet in your pursuit of wealth creation from stocks.
And like Frank Partnoy wrote this in a brilliant article many years back –
If we are limited to just one word of wisdom about decision-making for children born a hundred years from now, people who will have all our advantages and limitations as human beings but will need to navigate an unimaginably faster-paced world than the one we confront now, there is no doubt what that word should be.
Better, shut up and wait.