Spend more time in the library

Where do most investors go wrong in making their investment decisions? Warren Buffett, whom many like to think of as the world’s most successful stock market investor, has no doubts. People need to spend more time with their nose in a book, thinking about the way the world works, and less time looking at the price of the shares that they own. Buffett has long since moved on from buying individual shares to buying whole companies, but the way he spends his time has not changed much in the 50 years he has been a professional investor.

One day a couple of years ago, he received a faxed letter about a company he had never heard of. He liked what he saw. ‘The next day,’ reported the Wall Street Journal, ‘Mr Buffett offered to buy Forest River. He sealed the deal in a 20-minute meeting one week later. He spends most of his time alone in an office with no computer. He makes swift investment decisions, steers clear of meetings and advisers, and eschews set procedures. On a recent Wednesday he received only 13 phone calls, including one wrong number.’

This leaves him plenty of time for reading, and reading is how he gets most of his ideas. The point, says Richard Oldfield, a British fund manager who includes this passage in an entertaining new book of his own, is that spending all day looking at share prices moving around, as many investors now can do, thanks to the internet and real-time trading tools on their personal computers, is ‘an idiotic distraction and waste of time’. Not only that, but ‘staring at the Bloomberg machine impels people to do all sorts of things which are better left undone. Indolence can be constructive.’

The great merit of Oldfield’s book, Simple But Not Easy (Doddington Publishing), sub-titled A biased book about investing, is that it lays bare some of the secrets that professional investors rarely talk about in public, for fear of upsetting their clients.