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There's a quote attributed to Charlie Munger that's often shared on social media: "The big money is not in the buying and selling but in the waiting." It's a pithy statement that perfectly captures an essential truth about investing. However, like many such quotes, it appears to simplify what Munger said. The original statement from a 2004 speech at the University of California, Santa Barbara, was, "It's waiting that helps you as an investor, and a lot of people just can't stand to wait."
The actual quote may be less memorable, but it's more revealing. Munger wasn't just talking about waiting - he was talking about our inability to wait. This distinction is crucial because it points to one of the fundamental challenges all investors face: the constant urge to 'do something' with their investments.
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We live in an age of instant gratification. Our phones buzz with notifications every few minutes, we can order anything we want and have it delivered within hours, and we can transfer money or trade shares with just a few taps on a screen. This environment of constant activity and immediate response has created a peculiar perception about investing - that success in investing must also require continuous activity.
Nothing could be further from the truth. The reality is that good investing is more about temperament than technique. It's about having the emotional discipline to stick with your investments through market cycles, economic uncertainties, and the endless parade of 'urgent' news that demands immediate action.
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Consider a simple example. If you had invested in a basic index fund tracking the market twenty years ago and simply held on, you would have multiplied your money several times. This return wouldn't have come from clever trading or timing the market. It would have come from participating in India's economic growth over two decades. The real skill involved wasn't in choosing what to buy but deciding not to sell.
This is where Munger's wisdom becomes particularly relevant. He highlights a crucial psychological barrier to investment success when discussing people's inability to stand waiting. The waiting period isn't just about passing the time - it's about maintaining conviction in your investment choices. At the same time, markets fluctuate, friends boast about their latest trading profits, and financial media broadcasts endless reasons to worry.
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But there's an even deeper insight here. The inability to wait often masks itself as sophistication. Investors frequently justify their frequent trading or portfolio changes as 'responding to market conditions' or 'managing risk'. In reality, most of these activities are expensive forms of impatience. They generate transaction costs and taxes while rarely adding value.
This doesn't mean you should never change your investment portfolio. There are legitimate reasons to sell investments - when your financial goals change, the fundamental reason for holding an investment is no longer valid, or when you need the money for its intended purpose. Munger cautions against the kind of activity that comes from impatience rather than necessity.
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Therefore, the true challenge of investing isn't finding the next great opportunity. It's having the temperament to stick with sound investments through periods of uncertainty and volatility. It's about understanding that the path to investment success is rarely smooth or continuous and that periods of apparent inaction are often when your money is working hardest for you.
So perhaps we can propose our version of Munger's wisdom: The hardest part of investing isn't knowing what to do - it's having the patience to let your decisions work out over time.
Also read: What would Charlie do?
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