Avocados
“Great investing requires a lot of delayed gratification.” —Charlie Munger
The Dow Jones Industrial Average notched its eighth straight day of gains on Friday as it finished the week up 2.16%. The S&P was up 1.85% during the week, and the Nasdaq also saw a weekly gain as it rose 1.14%.
Now, let’s talk about avocados. In a post titled “The avocado principles,” from a few years ago, author Seth Godin uses metaphor to make some points about life. The first three of his principles are especially applicable to the investing process:
If you wait until you really want an avocado, the market won’t have any ripe ones. You need to buy them in advance.
If you eat an avocado that’s not quite ripe, you won’t enjoy it. AND, you won’t have a chance to enjoy it tomorrow, when it would have been perfect if you had only waited.
If you live your life based on instant gratification and little planning, you’ll either never have a good avocado or you’ll pay more than you should to someone else who planned ahead.
Much of what is required to be a successful investor can be summarized in two words: preparation and patience. If you develop skills by developing a consistent learning process and have the patience to wait for the right opportunity to present itself, your odds of success are high.
But if you want instant gratification—that ripe avocado or that great investment today, right now—it may not be available. You might reach for something less desirable because you hadn’t planned appropriately and hadn’t done the work necessary to increase the odds of getting what you wanted.
“Spend less than you earn. Invest shrewdly. Avoid toxic people and toxic activities. Try to keep learning all your life. And do a lot of deferred gratification. If you do all those things, you are almost certain to succeed. And if you don’t, you’ll need a lot of luck. And you don’t want to need a lot of luck. You want to go into a game where you’re very likely to win without having any unusual luck.” —Charlie Munger
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