In my last blog post, I wrote about the immense knowledge I have received from following Warren Buffett's lifetime work. This morning I woke up thinking about the value I provided yesterday. I felt it was a little short-sided in the way that the article did not encapsulate the effect Warren Buffett has had on investors around the world.
I am attaching an excerpt from my book, 7 Investments In Your 20's That Will Change Your Life, to illustrate how Mr. Buffett's metaphor about a baseball player hitting his perfect pitch plays a foundational role in a successful investor's mentality.
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When a baseball player steps into the batter's box, he is looking for the right opportunity to hit his perfect pitch. As a baseball player, he has seen thousands of pitches throughout his lifetime. He has seen bad pitches, good pitches, and every so often, the perfect pitch. The batter is able to distinguish the good from the bad most of the time, but it is truly remarkable when the batter is able to see the perfect pitch as the ball is coming out of the pitcher's hand. When he sees, the perfect pitch, he swings and crushes the ball over the outfield wall.
So what does a baseball player seeing his perfect pitch have to do with investing? Warren Buffett explains this analogy further.
"They may be wonderful pitches to swing at, but if you don’t know enough, you don’t have to swing. And you can sit there and watch thousands of pitches and finally you get one right there where you want it ... and then you swing."
A successful baseball player is disciplined enough to know he can’t swing at every pitch thrown his way. Investing is like baseball. There are over 2,500 companies listed on the stock market. In baseball, winners are selective with the pitches they swing at. In investing, winners are selective with the companies they invest in.
"I could improve your ultimate financial welfare by giving you a ticket with only 20 slots in it so that you had 20 punches representing all the investments that you got to make in a lifetime. And once you’d punched through the card, you couldn’t make any more investments at all. Under those rules, you’d really think carefully about what you did and you’d be forced to load up on what you’d really thought about. So you’d do so much better."
Opportunities will come into your life at different times. You may receive an abundant amount of opportunities when you are not looking for any. On the flip side, you may be looking for any opportunity to come your way yet you are not receiving any. Be patient an have resilience.
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I hope you were able to draw insight from this excerpt.
Successful investing is not a race. It takes years and even decades to create substantial wealth. Whether you decide to follow Buffett's 20-hole-punch ticket metaphor, his ideology of patient investing has made an imprint in todays article, and hopefully your investing philosophy.
Good investing,
Dan
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