Focus

Long Term Focus

Charlie Munger

In the long-term, we focus on our core holdings and avoid the distractions of blipping monthly data. We focus on company-specific factors, and we don’t make portfolio decisions based on guessing the direction of the economy, if or when there will be Federal Reserve Action, or the placement of our positions in the broader economy. Holding positions for the long-term requires patience, discipline, and a focus on companies that manage their businesses both well and consistently over time.

Minimize Turnover: Maximize Time

Adopting a long-term focus requires the understanding that fewer transactions over an extended time period result in fewer costs. We minimize portfolio turnover and maximize the timeframe in order to compound the greatest possible wealth. We focus on company-specific factors, and we don’t make portfolio decisions based on guessing the direction of the economy, if or when there will be Federal Reserve Action, or the placement of our positions in the broader economy. Holding positions for the long-term requires patience, discipline, and a focus on companies that manage their businesses both well and consistently over time.

Focusing On Long Term

This approach may seem obvious, but many advisors don’t invest for the long-term. They profit from frequent turnover, so advisors and pundits focus on heat maps and headlines rather than enduring trends. This removes focus from the businesses themselves. Their strengths and weaknesses go unnoticed, as investors become distracted by intraday returns. Companies, however, rarely compound value linearly, and by operating over a maximized timeline, we find we can focus on important signals, tuning out the short-term “noise.”