Hello friends,
Welcome to the 3rd edition of The Rational Investor Newsletter. Every business day, we share a timeless bit of wisdom from a legendary investor, followed by a little commentary to help Main Street become better investors!
Onto today's quote...[emphasis is mine]
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"Our investing strategy remains simple: Only invest in good companies, try not to overpay, and do nothing."
—
Terry Smith, 2025 Shareholder Meeting
Investing doesn’t have to be complicated. In fact, the more you simplify, the better your odds are of winning.
Terry Smith’s entire approach boils down to three things: buy good companies, don’t overpay, and do nothing.
That last part is where most people fall short since we tend to equate effort with results.
Of course, doing nothing isn’t as lazy as it may initially sound. At least with investing, it's the ultimate form of discipline.
It means resisting the temptation to tinker, trade, or time the market. It means trusting in the quality of the businesses you own—even if, in our case, we own great businesses via our index funds—and letting them compound on your behalf.
What makes this so difficult is that doing nothing feels wrong. It feels like you should be responding to the news, adjusting for interest rates, or taking profits. We shouldn't.
Because, more often than not, that urge to act destroys value.
Warren Buffett agrees...
"Lethargy bordering on sloth remains the cornerstone of our investment style."
Smith’s (and Buffett's) track record shows what happens when you stay out of your own way. Buying great businesses and leaving them alone isn’t exciting, but it works time after time.
Until next time, invest rationally.
-Ashby
P.S. If you'd prefer this in podcast form (plus me riffing a bit more on this topic), you can listen to it via The Rational Investor Podcast.
