Successful people say no to almost everything, according to Berkshire Hathaway Chairman Warren Buffett.
The 1991 Dinner in Washington
During a 1991 dinner hosted by Mary Gates, the mother of Bill Gates, guests were asked to name the single most important factor in their success. Both Gates and Buffett answered with the exact same word: focus.
“The difference between successful people and really successful people is that really successful people say no to almost everything,” Buffett said, according to accounts of his investment philosophy.
Buffett Manages His Time with Empty Days
Bill Gates noted the practical application of this philosophy during a 2017 Bloomberg interview, recalling when Buffett showed him his daily schedule. Gates said he had every minute of his day tightly packed, assuming that was the only way to accomplish tasks.
“He is so careful with his time … he has days where nothing is on it,” Gates told Bloomberg regarding Buffett’s calendar management.
The Baseball Metaphor for Investing
Buffett compares investment discipline to baseball, noting that a batter does not need to swing at every pitch. Instead, investors should wait for what he terms a fat pitch, meaning an opportunity that matches their exact criteria and understanding.
This approach requires passing on numerous proposals and trends that do not fit an investor’s core circle of competence. Every commitment of time or capital carries an opportunity cost that demands strict selectivity.
Portfolio Discipline Questions
Evaluating potential investments involves asking three specific questions regarding the target business model and personal attention span.
- Do I truly understand the underlying business model?
- Which positions consume my attention without ranking among my best ideas?
- Is this a clear opportunity or merely a reaction to external pressure?
What Successful People Say No To
What did Warren Buffett say about successful people?
Buffett said that the difference between successful people and really successful people is that really successful people say no to almost everything.
How does this principle apply to financial portfolios?
Investors apply this rule by passing on opportunities they do not understand, focusing instead on a select number of well-researched holdings rather than following broad market trends.
How can investors identify an oversized portfolio?
An investor holds too many positions when they can no longer explain each holding in one or two sentences, or when they spend more time consuming financial news than analyzing their core assets.
Worth a look
