Do it right a few times in your lifetime is enough

Table of Contents

Good investments are very rare

I quoted Charlie Munger, “Good investments are very ‘rare’, and when this once-in-a-lifetime investment opportunity presents itself, you have to bet all your chips.” in my book “The Rules of Super Growth Stocks Investing”. Because this once-in-a-lifetime investment opportunity will make you are very rich, which is also what I mentioned in “Great companies are rare, two or three will make you very rich“, a good investment target only needs two or three in a lifetime. reason enough.

Less is more

Few things to do in life to be successful

As Buffett said, “You only need to do very few things in your life (to be successful) as long as you don’t do too much wrong.”

Buffett once told freshmen in college, “Investors should invest with the mentality of having only 20 stock investment opportunities in their lifetime, so that every stock selection you will be extremely careful.”

Buffett “As long as a person can do a few things right in his life, if an investor can do a lot of investment after he is really familiar with a few industries, he will definitely get huge profits.”

Major achievements in life come from very few efforts

According to Morgan Housel’s book “The Psychology of Money“, Buffett owned about 450 companies in his lifetime, and only 10 of them brought him most of his wealth.

More than 20 years ago, there was a famous business book “The 80/20 Rule“; the book talks about a very simple but very reasonable concept, no matter whether it is a business, an individual, or our life, 80% of our time and energy will be spent in the few 20% of things. But 80% of our returns are from 20% items.

Investing once a year is enough

A never failed investor

John Train mentioned a story in his book “The Craft of Investing“. There is a gentleman, when the stock market is full of bears, the newspapers are full of bad news, and all forecasts are bad, he finds 30 stocks in the S&P 500 that are cheap, stable profit, no one heard but stable stocks that pay dividends, put a $50,000 investment position, buy this basket of stocks, and hold it patiently for 2 to 4 years. When the stock market reached a high point and the media kept reporting that the stock market hit a new high, he would sell the basket of these stocks and collect amazing reward. It’s a simple and reasonable way of stock investment.

2003’s annual report and meeting

In 2003 annual report, he said “The challenge for us is to generate ideas as rapidly as we generate cash.” and he also wrote “Good investment ideas are rare, valuable and subject to competitive appropriation just as good product or business acquisition ideas are. Therefore we normally will not talk about our investment ideas.”

In 2003 shareholders meeting, Munger noted that most financial institutions do exactly the opposite, fielding large research departments to track all 500 companies in the S&P 500. In contrast, Buffett said “You only need one good idea every year or so.“

You only need one good idea every year or so. You don’t need to be right on 20% of stocks or 10% of stocks or even 5%. Munger noted that 90% of investment management doesn’t think like Buffett and Munger do.

Buffett’s advice

Buffett has mentioned it many times, in terms of more important investment decisions; one year is enough to have a good idea, and sometimes it takes many years to have a good investment target or idea. Munger also echoed Buffett’s statement, saying that Berkshire’s success depends on only a few extremely successful investments to make it today.

Buffett “Finds a good investment opportunity for a year, and then holds on to it until its full potential is unlocked. In an environment where people are calling back and forth for quotes every five minutes, in an environment where people are always cramming all kinds of reports in front of you. In the environment, it is difficult to hold still. Wall Street makes money by tossing, you make money by not tossing.”

Just take care of your circle of competence

Buffett “Everyone has their own circle of competence. The important thing is not how big the circle of competence is, but to stay within the scope of the circle of competence. If there are thousands of listed companies in the market, your circle of competence only covers 30 of them, then you only need to know which 30 companies are.” Regarding the circle of competence, please refer to my previous discussion of the article “The importance of circle of competence“.

Then just avoid the mistakes that you should have done but didn’t do so you don’t do anything you regret. Because in this way, I can ensure that I don’t miss the opportunity, or it is related to my own ability, that is, those things that I can understand, fully understand, but don’t make the slightest effort. That’s the point I made in my article “Mistakes of omission and mistakes of commission“.

Greatness doesn’t have to be ostentatious

Most of the investment gurus who have been rated as extremely successful are actually very low-key people. You can refer to my “Richer, Wiser, Happier” article for explanation. There are also many respectable and rare corporate CEOs or leaders who are also very low-key people, which can be confirmed in “Outsiders, one of the greatest investment books for managment team“. But relatively low-key CEOs are rare; but low-key great investors are almost one of several things great investors have in common.

Buffett himself said the same thing in a 2008 Berkshire (tickers: BRK.A and BRK.B) shareholder letter, “Watch out for investment activity that draws applause; great moves are usually accompanied by a yawn.” He emphasized that “You don’t have to do extraordinary things to get extraordinary results.”

The last paragraph of Postscript in my book “The Rules of Super Growth Stocks Investing”, the following description was mentioned:

Leo Tolstoy once said: “Truth that wisdom is to be found not in systems but in the ordinary.” Carefully sail the boat for ten thousand years, be friends with time, experience the power of compound interest, gather sand into towers, and rise from the ground. It only takes a little more patience. As Ralph Waldo Emerson famously said: “Nothing is more simple than greatness; indeed, to be simple is to be great.”