The Wisdom of Doing Almost Nothing

"Through stillness, each fulfills its destiny."
-- Tao Te Ching, Lao Tzu

Last week, Morgan Housel introduced readers to Bill. Bill invested $10,000 into an S&P 500 index fund 10 years ago -- and has gone about living his life ever since. Only recently did he check on how his money was doing -- and it now rests at $19,590 with dividends reinvested.

The difference between Bill and hard-working, hard-thinking investing "professionals" is that he's fully enjoyed the past 10 years, living life to the fullest. As Morgan said:

[Bill] spent the decade visiting his kids, taking trips to the beach, reading good books, and enjoying life -- and managed to double his money all the while. These professionals, it seems, spent the decade poring over financial news, trading obsessively, stressing themselves relentlessly, and they're bitter about the market.

Of course, Bill did his homework on the front end, making sure that he was buying into the market at a smart time, but after that, he just let things be and lived his life. As Lao Tzu might say, "he let his portfolio be still, and it has fulfilled its destiny."

Want more proof?
Some people have adopted the habit that unless they force heaven and earth to abide by their will, the world won't be a very nice place. I guess it never dawns on these people that the earth will be just fine if we let it be.

These same people usually take a similar approach to investing: overanalyzing, overthinking, and generally exhausting themselves. But don't fret if this has happened to you; we're all subject to such mistakes.

Over the past year, I've publicly started my "World's Greatest Retirement Portfolio" and "World's Greatest Growth Portfolio." Since putting them in place, I've made exactly zero trades -- I've just let them be. So far, these two portfolios are beating the S&P 500 by 20 and 15 percentage points, respectively.

At the same time, I've actively managed a Roth IRA portfolio -- making at least one trade per month. That portfolio isn't doing nearly as well, as it has exactly mimicked the S&P 500.

If you're still not convinced, take a look at our Real-Money Stock Picks. Some of our analysts have made as many as 21 trades so far in 2012; others hover north of 10 trades, and one analyst has initiated an astounding 54 positions in his portfolio.

And yet, our two analysts who are performing the best -- Joe Tenebruso and Eric Bleeker -- have taken a remarkably hands-off approach to their investing. Joe has bought into just two companies this year, and only holds four companies total in his portfolio. Much of his success is due to large investments he made in Apple (Nasdaq: AAPL  ) .

Eric, on the other hand, has only made purchases on two different dates in 2012, and can thank investments in both Apple and Cirrus Logic (Nasdaq: CRUS  ) for his outstanding performance.

Because of their tendency to wait for just the right time, it's worth noting that both of these analysts recently made rare moves in their portfolios. Joe, who only focuses on what he considers to be "Tier One" companies, decided it was a good idea to own a piece of Starbucks (Nasdaq: SBUX  ) .

Eric, on the other hand, spends his time researching technology companies. He recently zeroed in on two companies in the data center field: VMware (NYSE: VMW  ) and F5 Networks (Nasdaq: FFIV  ) .

A few caveats...
I'll admit it, up to this point, my article hasn't been completely honest. It's certainly not impossible to put together a portfolio that meets your needs and is actively managed. And for our real-money stock pickers, this is their day job -- so they might find life a little more interesting if they're making moves.

But most people have much more important things to think about than investing. If you want to succeed, constant checking and stressing need not apply. If you'd like the Fool to help you out with some low-hanging fruit, I suggest you check out our latest special free report: "Secure Your Future With 9 Rock-Solid Dividend Stocks." Dividends are the most direct route to participate in corporate America's profits. Get your access to the report today, absolutely free!

Fool contributor Brian Stoffel owns shares of Apple and Starbucks. The Motley Fool owns shares of VMware, Apple, Cirrus Logic, F5 Networks, and Starbucks. Motley Fool newsletter services have recommended buying shares of Apple, Starbucks, F5 Networks, and VMware. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On August 22, 2012, at 7:09 PM, turb0kat wrote:

    so basically... market timing is key!! yes awesome investment advice.

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