Lessons From Laziness

I am sooo lazy. Ahem.

C'mon, folks. I'm so lazy. How lazy are you?

I'm so lazy; I actually lifted this story idea off a colleague. Totally. After Bill Mann's recent, interesting take on complexity, I emailed him to say, "Right on, Mann." I added something that was perhaps a bit indiscreet to reveal to a colleague, let alone the entire Motley Fool Community, but here it is anyway: I wrote, "Maybe I shouldn't admit this, but I am way too lazy to invest in companies that do more than a couple of things. The odds of missing something important are just too high."

Bill's response ran as follows: "Your statement is remarkably sophisticated, though you might view it as a weakness. What better reflection of your own style than to adopt the 'lazy man's approach' to investing?"

I think that's a compliment. Either way, it got the wheels spinning. There's a lot to be said for taking things easy, keeping complexity on the down low. Hey, maybe there's even a newsletter in there. What do you think? Seth Jayson's Motley Fool Stocks for the Slothful? No? Just trying it on. But I call dibs on the concept.

Basic laziness
Chances are, you're already lazy enough to embark on this program of self-improvement. But let's start out with a warning: The kind of laziness that can help you succeed is not the Homer Simpson, sleep-in-the-hammock-while-Marge-mows-the-lawn sort of laziness. But if you play your cards right, and reap the rewards of strategic sloth, you might get to retire early and get plenty of time to enjoy idyllic torpor of the hammock-napping variety.

If you are worried that you might not have what it takes to follow this demanding regimen, fear not. If you are interested in investing in stocks (and you must be if you're reading this), you are already on the road to productive laziness. Investing is a great way to capitalize on the brainpower and hard work of thousands of the world's most talented people.

Hey, it's got to be easier than putting in the kind of time that Apple's (Nasdaq: AAPL  ) Steve Jobs and Microsoft's (Nasdaq: MSFT  ) Bill Gates put in to build their empires, though I have to warn you up front that you probably won't become a billionaire through sloth alone, no matter how well you focus. But I am convinced that, for most of us, it is easier to grow wealth by recognizing the genius and hard work of others than to look for it within ourselves.

Profiting off others, that's the American way. Of course, this doesn't mean I avoid work altogether. It does mean that I try to do as little work as possible to live comfortably, happily, and richly. If you're thinking, "Hey, that's my kind of lazy!" Read on.

Intermediate laziness
Laying the groundwork for strategic financial sloth means taking a few key lessons from preparing to invest Foolishly. One of the most important is getting your finances in order. Laziness demands that you purchase some personal accounting software -- like Microsoft Money or Intuit's (Nasdaq: INTU  ) Quicken -- and learn to use it. It will track your income, expenses, and investments, saving you hundreds of hours of work over the next few decades. Avoiding excess work is the prime goal of our program.

Let's repeat that because, as it turns out, it's our overarching principle: Avoid excess work.

How do you do that? Account for everything in terms of units of your own personal labor. Making morning coffee: five minutes' work. Walking the puppy to the park to play on the tornado slide: half an hour's work. Commuting to the old nine-to-five: one hour of traffic-induced misery each way.

Do the same for your expenses. It's easy. Take your net pay and divide it by work weeks or months. If you net $48,000 a year and work 48 weeks, you earn $1,000 a week, or $200 per workday.

Imagine you're cruising through Wal-Mart (NYSE: WMT  ) or Coach (NYSE: COH  ) , eyeballing the merchandise, looking for a place to stash all the excess cash you're going to generate through your newfound financial laziness. Get very Zen, remember this column, and watch the dollar signs disappear. Close your lids and see the work units instead. Coach Flatiron Compact ID Wallet: an entire day's work. Nylon and Velcro jobber from the house of Sam: less than half an hour's labor. For pilgrims on the road to enlightened indolence, this is a no-brainer.

Advanced laziness
After you've warmed up at the grocery store, the amusement park, and your local restaurants, you may be ready to take your laziness up a notch. Consider one of the biggest expenses for many of us: the car. Sure, it may seem that the lazy thing to do is to simply pop in the key and drive that gas swiller to work everyday, but think again. Does that car really save you any time?

At 450 bucks a month for the car, plus $150 per month for insurance, another $100 for gasoline, and $100 for parking, our hypothetical workshopper needs to labor for almost a full week each month just to pay for getting to work. Pedal a bike an hour each way, as I prefer, and you not only receive a big refund in time, and you may even get to work faster than you did in the car.

How about the biggest investment many of us will ever make, that money-sucking beast that we call home? About two years ago, I figured out that a home remodeling project we wanted to undertake would cost upwards of $10,000 if we hired it out. I would have to work about three months (yes, I had a pretty crummy job back then) in order to pay for that project. I am way too lazy for that.

The path of lethargy led me, paradoxically, to a solid week of work. I took a couple days off from the office, picked up bargain materials, hit the Internet for know-how, and did the project myself, finishing over the next pair of weekends. By doing so, I saved well over two months at the office.

Stocks for the slothful
Woo-hoo! Finally, we get to the good stuff: picking stocks. Easy there, Seabiscuit. I'm already in danger of running afoul of the Fool's word-count limit, so I won't be able to discuss the matter fully. But I'll lay the groundwork here, and we can pick up the thread next week and look at a few stocks that might fit into our framework.

The key to finding stocks suitable for the lazy portfolio is to find businesses that require the bare minimum of work from the investor.

The Lazy Six

1. Keep it simple. Ideally, the business should do only one or two things. That way, we can become expert in its operations and its market. Simplicity also makes it far less likely that we will miss something important when we read the financial filings.

2. Beware the business cycle. We do not want to have to worry about cyclical industries or macroeconomic conditions. Personally, I believe peering into a crystal ball is futile, but even for those who have some success with the whole Nostradamus act; it's got to be a lot of work.

3. Invest in leaders. It is easier to assess the competition from the front of the pack than from the middle. Ideally, when we look back over our shoulders, there will be no one there at all.

4. Seek honest, minimalist management. Look for companies run by a team that explains things clearly and briefly. A press release per day means we stay far away.

5. Forget the chart watching. We do not follow technical trends nor do we trade. We lazy investors want no part of that eye-reddening time vacuum.

6. Don't overdiversify. This will undoubtedly raise a few eyebrows, but I'm sticking with my belief that diversification is a two-edged sword. Lots o' stocks means lots o' work.

That's it, folks. Six lazy rules to live by. Drop by next week, bring a pencil, and we'll explore the criteria more thoroughly and run a few tickers through the gauntlet.

Why work on picking stocks when the Fool's already doing it for you? Take a free trial of our newslettershere.

Fool contributor Seth Jayson loves writing for an outfit that actually appreciates his noble quest to avoid work. He owns no stake in any firms mentioned above. View his Fool profile here. The Motley Fool is investors writing for investors.


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