“One of the best rules anybody can learn about investing is to do nothing, absolutely nothing unless there is something to do.”
– Jim Rogers
I have to remind myself about this frequently. I have a tendency to want to be seen as “active” and “doing stuff”.
Many great investors talk about the importance of doing nothing. For example, Jesse Livermore said it was his “sitting tight” that “made the big money for [him].” In this case, he likely means letting the winners run, instead of taking a profit too soon. I’ve found true compounding occurs when I hold onto, or even press, my winners.
It’s important for me to remember, in investing, “doing nothing” is a decision and sometimes a good one.
But what does “doing nothing” mean?
Let’s invert first. “Doing something” in investing means putting on trades, taking them off, adding hedges–the “more visible parts” of the investing process. (Hint: it’s called overtrading for a reason.)
What are the “less visible parts” to the investing process? For me they are: reading, doing research, writing, expressing my views, or actively searching for views that conflict with my own.
When I find myself wanting to be active, instead of turning to trading more frequently, I remind myself to focus on the less visible side of my process.
LongHedge is where I try to turn the “less visible” parts of my investing process into a more visible part. Although it is mainly for me, I hope others can find value here. You can support by following, liking and or sharing this article with your friends!