temperament
Wait for the Fat Pitch
The rule
You are never forced to invest, so wait calmly and swing only when a clearly great chance comes. Like a batsman who is allowed to leave every weak ball.
Where it flips
Waiting for the perfect ball can slide into never buying anything, so you sit in cash for years and miss ordinary good chances. The fix is to keep a clear bar for 'great' and act firmly the moment it is met.
Unlike a batsman who must play a good ball, an investor pays no penalty for letting weak chances go by. That freedom is a huge advantage, but only if you use it: keep cash ready and refuse so-so setups instead of buying just to feel busy. The reward goes to the person willing to do nothing for long stretches, then act firmly when the rare fat chance comes.
A worked example
For eight months Aarvi finds nothing cheap enough and simply holds cash, ignoring the itch to 'do something'. When a market drop finally offers a quality company at a third off, she buys big. Her patience, not her activity, made the return. [illustrative]
How to spot it
- ·Buying just to feel productive
- ·No cash kept ready for a real chance
- ·Treating every average setup as a must-buy
Howard Marks · The Most Important Thing