Wall Street is perhaps the only place where you can make more money by working less. Sometimes doing nothing is the best thing you can do. And that’s why it has such an allure and tempts so many people into its clutches.
You see the stocks go up like a rocket ship and want to climb aboard. It is like gambling. There’s no two ways about it. However, what’s interesting, is a few wise and well-timed trades can make you wealthy, hence the allure and the tempting. On the other hand, a poorly timed and risky trade and you can go bankrupt. The rocket ship crashes.
There are many Wall Street clichés about trading, but perhaps the truest phrase is the working hard doesn’t necessarily equate to more money. Rather, sometimes a diligence can become an obsession and you start to act like Gollum with the Ring – staring at your stock trying to will it to go up. Waking up in the middle of the night to see if there’s any new news about your stock. The stock starts to weigh on your mind. If you’re constantly obsessing and worried about the stocks you own, then you’re probably not buying the stocks you should buy.
The ease to which Warren Buffett leans back in his chair and sips a Coke and plays bridge as Becky Quick massages his feet is evidence of this. He buys and holds for perhaps a lifetime. There’s no rush. There’s no panic. There’s no fear. He’s following the other axiom on Wall Street: buying stocks when everyone else is afraid. Buffett buys stocks when there’s so called blood in the streets the fear level is so high.
Of course, the work for Buffett comes in the research done prior to executing the trade. Once the trade is done, he’s done. This is where he instead becomes disciplined. He’s not watching the stock like a hawk throughout the trading day. I’m guessing he almost forgets about the stock. And all the while he’s usually collecting a nice dividend while he waits for the stock to grow at its own pace.
Perhaps behind this idea is the fact that not needing the money is a great way to make money. For Buffeet, there’s no rush to make money in the stock market to pay off debts or the need to make money to pay for living expenses or bills. And then there’s the having of a lot of money that of course makes it easier to make more money.
Buffett can afford to wait and never sell his stocks. Buffett has the money to bailout Goldman Sachs and Bank of America and collect absurdly good dividends while he waits for the stocks to rise. Sure, we can’t all trade like Buffett, we just don’t have his money, but we can execute trades like him on a smaller scale.
All right, everyone got that, good, let me get back to staring at my stocks and praying they go higher.