{"id":10418,"date":"2023-05-07T23:56:00","date_gmt":"2023-05-07T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=10418"},"modified":"2025-05-31T11:41:15","modified_gmt":"2025-05-31T03:41:15","slug":"sloth-is-great","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2023\/05\/07\/sloth-is-great\/","title":{"rendered":"Sloth is a great virtue in stock investment"},"content":{"rendered":"\n<p>A certain type of sloth is necessary. The biggest enemy of retail investors is over-trading.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/05\/07\/sloth-is-great\/#Buffets_view_in_shareholder_letters\" >Buffet&#8217;s view in shareholder letters<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/05\/07\/sloth-is-great\/#Investors_biggest_enemy_is_overtrading\" >Investor&#8217;s biggest enemy is overtrading<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/05\/07\/sloth-is-great\/#Closing_words\" >Closing words<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/05\/07\/sloth-is-great\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Buffets_view_in_shareholder_letters\"><\/span>Buffet&#8217;s view in shareholder letters<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Buffett is a big advocate of inaction. In his&nbsp;<a href=\"https:\/\/www.berkshirehathaway.com\/letters\/1996.html\" target=\"_blank\" rel=\"noreferrer noopener\">1996&nbsp;letter<\/a>, he explains why: almost every investor in the markets is better served by buying a few reliable stocks and holding on to them long-term rather than trying to time their buying and selling with market cycles.<\/p>\n\n\n\n<p>\u201cThe art of investing in public&nbsp;companies successfully is little different from the art of successfully&nbsp;acquiring subsidiaries,\u201d he writes,&nbsp;\u201cIn each case you simply want to acquire, at a&nbsp;sensible price, a business with excellent economics and able, honest management. Thereafter, you need only monitor whether these qualities&nbsp;are being preserved.\u201d<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cWhen carried out capably, an investment strategy of that type will often result in its practitioner owning a few securities that will come to represent a very large portion of his portfolio\u2026 To suggest that this investor should sell off portions of his most successful investments simply because they have come to dominate his portfolio is akin to suggesting that the Bulls trade Michael Jordan because he has become so important to the team,\u201d he adds.<\/p>\n<\/blockquote>\n\n\n\n<p>Buffett\u2019s warning was a prescient one for retail investors who decided to take it. From 1997 to 2016, the average active stock investor only made about 4% returns annually, compared to 10% returns for the S&amp;P 500 index as a whole. In other words, constantly buying and selling stock, and thinking that you can get an advantage from your instincts or analysis, has been proven to lead, in most cases, to smaller gains. And not just for your average retail investor.<\/p>\n\n\n\n<p>\u201cLethargy bordering on sloth remains the cornerstone of our investment style,\u201d Buffett wrote in his&nbsp;<a href=\"http:\/\/www.berkshirehathaway.com\/letters\/1990.html\" target=\"_blank\" rel=\"noreferrer noopener\">1990&nbsp;letter<\/a>, and the difficulty of making any kind of money from buying and selling stocks is the very reason why.&nbsp;\u201cInactivity,\u201d he adds,&nbsp;\u201cstrikes us an intelligent behavior.\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Investors_biggest_enemy_is_overtrading\"><\/span>Investor&#8217;s biggest enemy is overtrading<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In Sections 1-4 of my book &#8220;<a href=\"https:\/\/www.books.com.tw\/products\/0010889106?sloc=main\" target=\"_blank\" rel=\"noreferrer noopener\">The Rules of Super Growth Stocks Investing<\/a>&#8220;, pages 45-47, when discussing the stock turnover rate, I have listed in detail the major exchanges in the United States, Taiwan, and China for each era. The investor&#8217;s stock turnover ratio.<\/p>\n\n\n\n<p>Most people will refute that the current transaction fees are already very low. The major online brokerages in the United States have reduced their fees to zero even three years ago, so it will not have any impact on investors.<\/p>\n\n\n\n<p>This kind of view is extremely blind to the trees, because the turnover rate of holdings is too high, which will of course lead to short-term or hedging transactions.<\/p>\n\n\n\n<p>In Section 4-2, page 198, of the book &#8220;<a href=\"https:\/\/www.books.com.tw\/products\/0010935641?sloc=main\" target=\"_blank\" rel=\"noreferrer noopener\">The Rules of 10 Baggers<\/a>&#8220;, I mentioned that in the two years from 2020 to 2021, the trading volume of Taiwan stocks was as high as NT$ 54 trillion. But lost NT$ 63 billion.<\/p>\n\n\n\n<p>Why is this the case? Because doing so violates the fundamental principle that stock market investment can be profitable\u2500\u2500holding stocks for a long haul.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Closing_words\"><\/span>Closing words<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Carefully screen stocks that meet your investment principles, concentrate on investing, and rather than overuse. After buying, hold it for a long time, even during a bear market or crash, you should take advantage of this rare opportunity to increase your purchases and enter the market to pick up bargains. Don&#8217;t sell unless you have to &#8212; this is the only way for investors to accumulate assets that satisfy you in the stock market.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"120\" height=\"101\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2023\/01\/s-1600x1200-1.jpg\" alt=\"Sloth\" class=\"wp-image-17483\"\/><figcaption class=\"wp-element-caption\">credit: wwf.org.uk<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/05\/07\/sloth-is-great\/\">Sloth is a great virtue in stock investment<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/12\/14\/buffett-hold-for-long-haul\/\" target=\"_blank\" rel=\"noreferrer noopener\">Is Buffett no longer hold for long haul? TSMC, HP, and US Bancorp cases study<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/09\/18\/time-discipline-and-patience-are-the-three-elements-of-successful-investment\/\" target=\"_blank\" rel=\"noreferrer noopener\">Time, discipline and patience are the three elements of successful investment<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/08\/20\/simpler-investment-better\/\">The simpler the investment, the better<\/a>&#8220;<\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>A certain type of sloth is necessary. The biggest enemy of retail investors is over-trading.<\/p>\n","protected":false},"author":1,"featured_media":17483,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[786,69,35,70,11],"tags":[],"class_list":["post-10418","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-simplility","category-discipline","category-long-term-investing","category-patience","category-buffett"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/10418","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=10418"}],"version-history":[{"count":17,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/10418\/revisions"}],"predecessor-version":[{"id":36728,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/10418\/revisions\/36728"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/17483"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=10418"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=10418"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=10418"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}