"Sit on Your Ass" Investing: Patience as a Strategy
Munger's own phrase for an investment style built around very few decisions, extreme patience, and large bets when conviction is genuinely high.
Munger's own, deliberately blunt phrase for his preferred investing style is "sit on your ass investing" — making very few decisions, holding them for very long periods, and reserving large position sizes specifically for the rare situations where genuine conviction, built from the multidisciplinary analysis covered throughout this course, is unusually high, rather than constantly trading in and out of a large number of moderate-conviction ideas.
This connects directly back to the compound interest model from this course's second chapter: frequent trading interrupts compounding (through transaction costs, taxes on realized gains, and the practical difficulty of consistently finding new opportunities as good as the ones being sold), while a small number of long-held, high-conviction positions lets each holding's own business compounding work uninterrupted over decades.
Munger is explicit that this patient, low-activity style isn't passive in the sense of requiring less rigor — it requires more, concentrated into fewer decisions. Correctly identifying the rare situations that deserve a large, long-held position requires the full latticework of mental models, honest circle-of-competence assessment, and vigilance against the psychological biases covered throughout this course, since a mistake in one of these rare, large decisions is far more consequential than a mistake in one of many smaller, more frequently-adjusted positions would be.
An investor practicing this style might go years without making a new major investment, waiting specifically for a situation where the business quality, price, and the investor's own genuine circle-of-competence understanding all align with real conviction — and then commit a large portion of the portfolio to that single opportunity, rather than spreading capital thinly across many smaller, lower-conviction ideas discovered on a more frequent schedule.
- "Sit on your ass investing" describes Munger's preference for very few decisions, held for very long periods, with large position sizes reserved for rare, high-conviction situations.
- This connects to the compound-interest model covered earlier in this course — frequent trading interrupts compounding, while long-held, high-conviction positions let each holding's own business compounding work uninterrupted.
- The style demands more rigor concentrated into fewer decisions, not less rigor overall — correctly identifying the rare situations worth a large position requires the full toolkit this course has covered.