process
Masterly Inactivity
The rule
Doing almost nothing is the strategy. Buy rarely, sell almost never, and let good businesses work while you sit still.
Where it flips
Sitting still turns dangerous when it becomes willful blindness: holding a business whose health has clearly broken, because selling feels like "doing something." The fix is to stay still about price noise, but stay alert to real rot in the business itself.
Most investors feel they must always be "doing something": trading in and out, reacting to news, tweaking weekly. But every trade carries costs, taxes, and the risk of a poor choice. Constant activity rarely helps returns. More often it quietly drains them. Once you own a handful of truly good businesses, the best action is usually no action. This patience is not laziness. It is the deliberate refusal to interrupt a machine that is quietly growing your money.
A worked example
Vikram buys four solid companies and then does nothing for five years except read their annual reports. His cousin trades every month. After costs and taxes, Vikram is comfortably ahead. [illustrative]
How to spot it
- ·very few transactions in a year
- ·ignores daily price swings and market noise
- ·sells only when the business truly changes
Pulak Prasad · What I Learned About Investing from Darwin