The discipline of doing nothing.
Why restraint, not brilliance, is the most underrated skill in investing.
The argument.
Many long-term losses are self-inflicted, and most happen in a hurry. Frequent trading can feel productive, but it brings fees, taxes and slippage, and the risk of swapping a good investment for something merely exciting.
Restraint means deciding in advance what would make you sell, respecting ordinary outcomes, keeping cash available and judging decisions over years rather than quarters.
In private investing, it also means walking away from businesses with weak cash flow, from valuations that need everything to go right, and from partners whose incentives do not line up.
Holding, waiting or staying in cash are active choices. Investors do not have to take every trade the market offers.
Read the full article on The Long View.