Warren Buffett is considered to be the best investor in the world. What is it that makes Warren Buffett so good? How many stocks or companies has he bought and sold over the years? A few hundred? He is the best investor in the world based on a few hundred decisions that he has made in his lifetime. He has the best judgment.

But in between making these decisions, what does he do? He waits. He does nothing. Warren Buffett is the king of doing nothing. He has held Apple, what, 10 years? And he has had the good sense not to mess with it, until recently. His holding period is about as long as it gets. Warren Buffett is worth $100 billion because he is better at doing nothing than you are.

Do you have any idea how hard this is, to do nothing? Here is what usually happens: You buy a stock, it goes up 5%, and you hit the sell button. After you sell it, it goes up another 200%. 

If there is one thing I have learned from my years of trading, it is patience. I’m no Warren Buffett, but I am pretty good at doing nothing. I play music in my office and stare at the screen and just sit here like a rock, waiting. Nobody ever talks about this, but most trades will work if given enough time. If you buy a stock and it goes down 10%, most of the time, it will actually come back if you just leave it alone. 

The only question is whether you’re comfortable tying up that capital while you’re waiting for it to come back. In 2007, I bought MUFG, a large Japanese bank. It took a dirtnap almost immediately after I bought it. Just a few weeks ago, I sold it for a profit. I waited 18 years. Now, it was a tiny trade and wasn’t tying up much capital, and if it had been, I might have felt differently. But yes, I was willing to wait 18 years to make $5,000. How’s that for patience?

Some Problems Should Be Ignored

Some people like to ignore problems, hoping that they will go away if they ignore them long enough. You know what? That is usually true! Most problems will go away if you ignore them long enough. 

I find that when I intervene in a problem, I usually make it worse. Having a tiff with your best friend? The best thing to do is nothing. Does something need to be said? Does something need to be said by me? Does something need to be said by me right now? Unless the answer to all those questions is yes, it’s best to just leave it alone, and your friend will either get back to you or he won’t. If you get involved, you will probably blow it up. Just ignore it. The only thing I can’t ignore is my wife when she tells me to put my dishes in the dishwasher. She will make my life miserable.

That’s not to say that you should be undisciplined about losses. If a winner turns into a loser, you need to do some hard thinking about whether you should cut your losses and move on. But again, it depends on your time horizon. This stock may be a loser in a month, but maybe it will be a winner in 10 years, and if you are thinking in terms of decades, it makes sense to hold on to it. 

The hardcore trader guys do have some wisdom about cutting losses, and if you are operating in the micro term, you can’t afford large losses. But if you are operating in the very long term, you can. On a 10-year time frame, the chance that you will be down on a position at some point is very close to 100%. Charlie Munger said something to the effect that if you can’t withstand a 50% loss in a position, then you have no business trading stocks. Netflix and Bitcoin have had several 70–80% losses over the years. I mean, after an 80% loss, you might as well hold on!

Money Is Made in the Waiting

The money is neither made in the buying nor the selling. The money is made in the waiting. Here is another piece of wisdom for you: If the money is made in the waiting, then there really is no point in looking at your phone every five minutes (or even every day) to check the price. The more you check your phone, the more likely it is that you’re going to make a bad decision. 

There have been some studies on how the holding period for stocks keeps going down, down, down. Some of this is because of electronic trading, but a lot of this is because we have access to real-time data on stock prices, which gives us negative feedback and forces us to sell. 

In the 1980s, you got to check your stocks once a day in the newspaper. Imagine! Chances are that your holding period on Anacott Steel was pretty long. I won a stock market competition in high school, in 1991. 1991 was a bear market, if you recall. I put 100% of our funny money in one stock and held it for the entire semester. Everyone thought I was a genius. I did two things right: I didn’t diversify, and I didn’t sell too early! Picking the right stock was luck.

It's not good to sit there and stare at the screen. Go play golf; go walk the dog. Lately, I have been reading in the middle of the trading day. I’ll cut out early and head to my library and read some Raymond Carver. If anyone needs to get ahold of me, they can call. Nothing is going to happen at 3 pm in the afternoon in June, and if it did, it’s not like I would do much about it anyway. I took a week off of trading to go to Mississippi last month, and absolutely nothing happened. At the end of the week, I was unch.

I will leave you with one last point. Humans and computers are better at different things. Computers are better at speed, while humans are better at judgment. A computer can only “think” out a few minutes. Human beings can think out decades. You are never going to be faster than a computer; you are never going to beat a computer in short-term trading. Day traders fail miserably. But Buffett can beat any computer over a lifetime.

Twelve days until RULE 62: Meditations on Success and Spirituality is released. You can preorder the e-book here. Or you can wait until June 24 to get the hard copy. You fired up? I am.