Buffett on Investing

Warren Buffett’s latest letter to Berkshire Hathaway holders is definitely worth a read. You don’t have to read the whole thing – for the most important bits, start from page 17: ‘Some thoughts about Investing’.

That said, if you’re really short on time, I’ve made it even easier for you: here are some of the key sentences and my thoughts.

  • Owners of stocks, however, too often let the capricious and often irrational behavior of their fellow owners cause them to behave irrationally as well. Because there is so much chatter about markets, the economy, interest rates, price behavior of stocks, etc., some investors believe it is important to listen to pundits – and, worse yet, important to consider acting upon their comments.
  • Those people who can sit quietly for decades when they own a farm or apartment house too often become frenetic when they are exposed to a stream of stock quotations and accompanying commentators delivering an implied message of “Don’t just sit there, do something.” For these investors, liquidity is transformed from the unqualified benefit it should be to a curse.
  • Both individuals and institutions will constantly be urged to be active by those who profit from giving advice or effecting transactions. The resulting frictional costs can be huge and, for investors in aggregate, devoid of benefit. So ignore the chatter, keep your costs minimal, and invest in stocks as you would in a farm.

I’d say we can take one major point from this: trading should not be about chasing price around the markets and reacting to every little movement. It’s a longer-term consistency game. Somewhere in all the FX chatter and hype we seem to have lost this, and I don’t know why.

Our aim here at Littlefish is to help you bring some of that back. Yes, you can track our managed accounts on your phone/iPad/tablet/other device. Yes, you could watch it every day, ride an emotional rollercoaster and get addicted to keeping score. But why would you?

The whole point is that we generate above average returns on a long run timeframe. Our job is to outperform the funds and indexes over the course of a year in a low cost environment to help you benefit. We do this by following our own rules and logic, and a system that has sound fundamental principles.

So to any budding traders out there, or people addicted to keeping score, I offer up possibly the best piece of advice I have ever read, from the legendary investor himself:

Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.