Watering
the Flowers and Cutting the Weeds
My favorite things in life don’t cost any money. It’s really clear that the most precious
resource we all have is time
Steve Jobs
In
the game of Go, stones can be played at any open location on a large grid. Because of this openness and flexibility, a
Go player is never locked into any particular position on the board. When I was learning to play, my uncle
observed that wherever you focus your attention is where the game develops—many
times a player can shift the outcome of the game dramatically by simply playing
in a new area rather than continuing to “fight it out” in one particular are of
the board. This lesson also applies to life—whether
we realize it or not, we have choices as to where we invest our energy and time,
and it is worthwhile to evaluate the performance of those investments. To that end, some of the wisdom from great
capital investors may also be useful in improving our life investments.
What to avoid
Mathematician Carl
Gustav Jacobi’s approach to solving problems was to “Invert, always
invert”. Charlie Munger often relies on
this technique in investing and living a good life. Thus, rather than initially focusing on how
to invest time and energy well, it may be easier to prune out the poorer
choices.
Warren Buffett has often talked about avoiding investments
in struggling companies, particularly ones attempting to “turn around”
operations.
Both our operating
and investment experience cause us to conclude that turnarounds seldom turn,
and that the same energies and talent are much better employed in a good
business purchased at a fair price than in a poor business purchased at a
bargain price.
While
people are capable of changing, by and large, it is rare for someone to have a
major shift for the better, hence the oft-quoted aphorism: “When people show
you who they are, believe them.” Thus,
one of the easiest ways to get better outcomes is to avoid relationships with
people that consistently take energy, but give little or nothing back. For example, avoid toxic personal
relationships that are a constant emotional drain, CYA managers that neither
make decisions nor delegate authority, low-competency employees that
nonetheless require constant attention, or the like. Similarly, a host of bad outcomes can be avoided
by cutting out addictive habits that take up significant time but provide
relatively low enjoyment or personal growth.
Although these habits may differ for different people, common examples
include excessive drug usage or dependency, obsession with social media, news,
or politics, arguing with strangers on the Internet, video games designed to
occupy as much time as possible, or watching videos with few or no redeeming
qualities.
Although
avoiding these relationships and activities may seem simple or obvious, simply
avoiding bad decisions can have outsized results. Charlie Munger explains the success of
Berkshire Hathaway by saying: “It is remarkable how much long-term advantage
people like us have gotten by trying to be consistently not stupid, instead of
trying to be very intelligent.”
Where to Invest
Although pruning the
worst relationships and activities can yield strong outcomes on its own, pairing
it with even a few good ones can add a multiplier effect. Fortunately, great investments are usually
fairly obvious. Buffett and Munger have
discussed this a few times over the years:
The difference
between a good business and a bad business is usually the good business throws
up one easy decision after another, whereas the bad business throws up awful
decisions time after time after time.
Find
the relationships and activities that consistently give at least as much reward
as the energy they take, e.g.: the friendships that get stronger and better the
more time and energy you put into them; the job that rewards your hard work;
the activities that make you a better person; and the relationships that enhance
your best attributes while helping correct your worst.
Water the Flowers, Not the Weeds
This
is not to say that time and energy should only be invested in things that are
easy or that everything that is difficult should be avoided—grit and hard work
are important, but it is critical not to over-commit to people or activities
that consistently yield bad outcomes.
Peter
Lynch was one of the greatest mutual fund managers of all time. He noticed that investors often sold their
best companies and continued to hold or even invest more in the worst. He likened these to flowers and weeds: “You won’t improve results by pulling out the
flowers and watering the weeds.”
We must remember to water the flowers and not
the weeds.
December 26, 2019