Even as the equity markets look for cues from the ongoing earnings season and the upcoming union budget, VC firm, The Collaborative Fund’s Morgan Housel says that 99% of investing is doing nothing.
Even as the equity markets look for cues from the ongoing earnings season and the upcoming union budget, VC firm, The Collaborative Fund’s Morgan Housel says that 99% of investing is doing nothing. “My basic idea is 99% of investing is doing nothing, 1% will change your life, and that 1% is the only visible part so it’s all we talk about,” Morgan Housel, partner at $100 million asset manager, The Collaborative Fund wrote in a recent blog.
The Collaborative Fund is a seed-stage venture capital firm whose portfolio companies include popular names such as Reddit, Quora, Blue Bottle Coffee and Kickstarter. Notably, Morgan Housel had spent nine years as an investment columnist with The Motley Fool, while also writing for such publications as The Wall Street Journal. In the blog, Morgan Housel explores the power of doing nothing. “Doing nothing most of the time is what makes doing something big some of the time possible,” writes the author.
Morgan Housel observes that top investors and industrialists had the ability to do nothing, when required. “Most of history is made by those who mastered the art of doing nothing when nothing needed to be done. This is especially true for business leaders and investors. Their do-nothingness can be more important than their inclination to do something. We just pay more attention to the somethings because they’re more obvious and exciting,” the author said.
Sharing Charlie Munger’s approach to investing, Morgan Housel quotes the top investor as saying, “Look at lots of deals and don’t do almost all of them.” In the blog, the author quotes Microsoft’s Bill Gates’s approach on cash management. “I came up with this incredibly conservative approach that I wanted to have enough money in the bank to pay a year’s worth of payroll even if we didn’t get any payments coming in. I’ve been almost true to that the whole time,” Morgan Housel quotes Bill Gates as saying.
The author captures that investors are sometimes unable to escape the trap of doing something. “The pull toward constant action implicitly assumes the best opportunities are constantly presenting themselves to you at every moment. It’s hard to think of living in bigger bubble,” Morgan Housel cautions adding that doing nothing may have its own advantages at times. “Doing nothing gives you options to do something different in the future. And options can be one of the most valuable assets in world that’s constantly changing and breaking down old rules,” says the reputed author.