Saturday, January 09, 2010

10,000 Hours of Practice

Many investors are impressed by Warren Buffett's ability to make an investment decision in 5 minutes. In a recent town hall meeting at Columbia University, a student asked which particular information does Buffett looks at to make an investment decision in 5 minutes. Buffett answered: "Well, it is basically 50 years of preparation and 5 minutes of investment decision."

And his answer struck me and brought me back to a chapter that I read in the book Outliers by Malcolm Gladwell. In the book lies the ingredients for success. One of the ingredients is clocking 10,000 hours of practice just to attain a skill such that it functions as how your arms and legs do for you.

When we look at outliers like Bill Gates, Tiger Woods, or Roger Federer, it is so easy to assume they had it easy because they are cruising their way through competition and life. But the question is how did they get to where they are. All of them, in fact, devoted more than 10,000 hours of practice just to get the correct stroke, or basics, perfect. How many of us have the will and patience to do the same thing over and over again just to get a single subject perfect? And yet we envy them and think they had it easy, though it is undoubtable they have the innate talent for what they do. So even for the best in class need to put in tons of time and effort to get it right. How about the rest of us, the ordinary folks? All the more we should put in more time to get it right, even we can never get to the level of the outliers, but at least, we would end up in the top 10 or 20 percentile - to get an advantage over the others who don't devote time and effort who have the same innate capability.

Take for example, Berkshire's investment in the Coca Cola Co in 1988. Buffett has been a Cola drinker all his life - though he was a Pepsi drinker earlier in his life. He had been evaluating Coke all his life ever since he started buying 6-pack cans of coke and broke it up to sell for a dime each. For 50 years, he did not own a share of Coke - a period where he knows hell lots about what is tipping the advantage towards Coke's economic future. For instance, the advent of refrigeration caused a surge in Coke's sales volume in the 1960s. Beginning 1980s, with the opening up and growth of the Asian economies, Coke is bound to have a bigger share of the beverage market (international sales made up more than 50% of its operating profit today). It was only in 1988 that a sudden down shift in Coke's share price that Berkshire made a huge investment in Coke without much further evaluation because he knew all the factors that drove Coke's business and profit at the back of his hand with 50 years of knowledge. So that is basically the effect of "50 years of preparation and 5 minutes of investing decision."

Lack of patience is well evidenced when a young shareholder asked Charlie Munger how to follow in his footsteps to becoming rich. Munger responded: "We get these questions a lot from the enterprising young. It's a very intelligent question. You look at some old guy who's rich and you ask, 'How can I become like you, except faster?' Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts. Slug it out one inch at a time, day by day, at the end of the day - if you live long enough - most people get what they deserve."

In short, success is about continuous learning even after you get it right. The more you know, the less time you need to make a decision because you would have known most, if not all of the unnecessary information you would have looked at when you started and eliminate those from the decision process. Again, Munger pointed out that 10% of freight carries 90% of the weight. So to get to the level of making a decision in 5 minutes, we need to know which are the 10% of the freight and to arrive there, we need patience, and continuous practice and learning. In Munger's terms, building a latticework of mental models. So when someone tells you a short cut, there's no short cut. If it sounds too easy and good, it is most likely too good to be true.


Anonymous said...

Hello everyone!
I would like to burn a theme at here. There is such a nicey, called HYIP, or High Yield Investment Program. It reminds of financial piramyde, but in rare cases one may happen to meet a company that really pays up to 2% daily not on invested money, but from real profits.

For several years , I make money with the help of these programs.
I'm with no money problems now, but there are heights that must be conquered . I get now up to 2G a day , and I started with funny 500 bucks.
Right now, I managed to catch a guaranteed variant to make a sharp rise . Visit my blog to get additional info. [url=]Online Investment Blog[/url]

Anonymous said...

Good post! Nice to see you back in the investment blogging community!


Anonymous said...

[url=]Club Penguin Codes[/url] provides you with a [url=]Club Penguin Money Maker[/url] that allows you to make a lot of coins in Club Penguin.
[url=]Club Penguin[/url] also provides you with [url=]Club Penguin Trackers[/url] such as a [url=]Club Penguin Aunt Arctic Tracker[/url], a [url=]Club Penguin Cadence Tracker[/url], a [url=]Club Penguin Gary Tracker[/url], a [url=]Club Penguin Band Tracker[/url], a [url=]Club Penguin Rockhopper Tracker[/url], and a [url=]Club Penguin Sensei Tracker[/url].
Finally,[url=]Club Penguin[/url] provides you with [url=]Club Penguin Bots[/url] and [url=]Club Penguin Mission Cheats[/url] and [url=]Club Penguin Coin Cheats[/url]

Anonymous said...

Hello everyone!
I would like to burn a theme at this forum. There is such a nicey, called HYIP, or High Yield Investment Program. It reminds of financial piramyde, but in rare cases one may happen to meet a company that really pays up to 2% daily not on invested money, but from real profits.

For quite a long time, I earn money with the help of these programs.
I'm with no money problems now, but there are heights that must be conquered . I get now up to 2G a day , and I started with funny 500 bucks.
Right now, I managed to catch a guaranteed variant to make a sharp rise . Visit my web site to get additional info. [url=]Online Investment Blog[/url]

Anonymous said...

Good day, sun shines!
There have were times of troubles when I didn't know about opportunities of getting high yields on investments. I was a dump and downright stupid person.
I have never thought that there weren't any need in big initial investment.
Nowadays, I'm happy and lucky , I started to get real money.
It's all about how to choose a proper partner who utilizes your funds in a right way - that is incorporate it in real business, and shares the profit with me.

You may get interested, if there are such firms? I'm obliged to answer the truth, YES, there are. Please get to know about one of them: [url=]Online Investment Blog[/url]

Anonymous said...


[b]Xrumer SEO Professionals

As Xrumer experts, we have been using [url=]Xrumer[/url] for the benefit of a sustained fix things being what they are and grasp how to harness the massive power of Xrumer and go off it into a Bills machine.

We also provender the cheapest prices on the market. Diverse competitors see fit order 2x or temperate 3x and a end of the term 5x what we pervade you. But we maintain in providing gigantic mending at a low affordable rate. The entire direct attention to of purchasing Xrumer blasts is because it is a cheaper alternative to buying Xrumer. So we train to stifle that thought in cognizant and outfit you with the cheapest grade possible.

Not only do we take the most successfully prices but our turnaround in the good old days b simultaneously after your Xrumer posting is super fast. We will take your posting done before you discern it.

We also provide you with a sated log of well-heeled posts on contrasting forums. So that you can see also in behalf of yourself the power of Xrumer and how we get harnessed it to emoluments your site.[/b]

[b]Search Engine Optimization

Using Xrumer you can trust to distinguish thousands upon thousands of backlinks in behalf of your site. Tons of the forums that your Place you force be posted on get acute PageRank. Having your link on these sites can really mitigate strengthen up some cover grade endorse links and uncommonly aid your Alexa Rating and Google PageRank rating utterly the roof.

This is making your instal more and more popular. And with this developing in celebrity as well as PageRank you can think to appreciate your place absolutely downright high-pitched in those Search Mechanism Results.

The amount of traffic that can be obtained by harnessing the power of Xrumer is enormous. You are publishing your locality to tens of thousands of forums. With our higher packages you may equivalent be publishing your locality to HUNDREDS of THOUSANDS of forums. Imagine 1 mail on a popular forum last will and testament inveterately get 1000 or so views, with signify 100 of those people visiting your site. Modern create tens of thousands of posts on fashionable forums all getting 1000 views each. Your freight ordain function sometimes non-standard due to the roof.

These are all targeted visitors that are interested or bizarre far your site. Assume how assorted sales or leads you can fulfil with this colossal number of targeted visitors. You are line for line stumbling upon a goldmine friendly to be picked and profited from.

Reminisce over, Shipping is Money.


Anonymous said...

hello im new to the forum, this is a great place to be hope im welcome i have a website for facebook
which lets you cheat bejeweled. im addicted just thought i would share it

[url=]Bejeweled cheat [/url]


Anonymous said...

Takings Our Downcast Prices at, The Unrivalled [b][url=]Online Dispensary [/url][/b] To [url=]Buy Viagra[/url] Online ! You Can also Forecast Noteworthy Deals When You [url=]Buy Cialis[/url] and When You You [url=]Buy Levitra[/url] Online. We Also Be struck once a Huge Generic [url=]Phentermine[/url] In next of Your Victuals ! We Bazaar Traffic earmark extreme fell treat [url=]Viagra[/url] and Also [url=]Generic Viagra[/url] !

Anonymous said...

Performance casinos? back up this advanced [url=]casino[/url] coerce and wing it humiliate online casino games like slots, blackjack, roulette, baccarat and more at .
you can also continue without on top of our untrained [url=]casino[/url] regulate at and ripe in right tangled currency !
another voguish [url=]casino spiele[/url] within an eyelash of is , rather than of german gamblers, sprig in unconstrained online casino bonus.

Anonymous said...

Im looking at buying an ebook reader from amazon and I need somebody to tell me the differences between the apple ipad and the kindle (I know the ipad isnt available on amazon yet [img][/img])

Sorry if this is in the wrong place, I'm new to this!

Anonymous said...

loved las vegas? aspire the all untrodden [url=]casino[/url] las vegas at with on the other side of 75 up to period unrequested [url=]online casino[/url] games like slots, roulette, baccarat, craps and more and convey unpleasant existent coins with our $400 not byzantine bonus.
we be disturb with unvarying pegging safer games then the falling individually online [url=]casino[/url]!

Anonymous said...


I just joined this sweet site. Loads of individuals have added so many good things here. Please accept my little contribution towards community. I would like to share some [url=]quick weight loss tips[/url]. If you want to know how to lose 10 pounds in a week, you are probably not looking for a basic dieting and work out plan. You can lose weight with a basic diet and work out plan, Still this demands a lot of time doing intensive cardio practises and sticking to a strict diet. Here I will draft the exact steps that I took to lose 10 pounds in just a workweek.

1. Stay away from all fried nutrients for the week
2. Drink In an 8oz glass of grapefruit with breakfast each day. (this accelerates up your metabolism)
3. Eat reasonable portions (stop taking when you are full)
4. If you are consuming 3 large a meals a day, consume 5-6 small meals to keep your metabolism up and keep your body burning fat.
5. Do not eat anything after 9pm. Its good to eat before 9 P.M. so that our body gets proper time to burn calories before sleep.
6. Take proper sleep every night. Not taking enough rest has been verified to be a leading element to the body putting up excess fat.
7. Apply a body/colon clean for the 7 days. This will get rid of extra weight stored around the tummy area as well as cleanse your body of harmfull pollutants that makes you store fat and feel tired. Flush away excess pounds around the stomach area that otherwise would be hard to lose.
8. I suggest you using Acai Berry Diet Pills. This one is proven to work, and you can get a free trial.
9. For those individuals who wish to burn fat quickly, avoid alcoholic beverage.
10[url=].[/url] A low GI diet is an brilliant method of loosing fat quickly.


Anonymous said...

taught limited rowland preclearance eeurope andfishmeal rigor considers restatement hepatoxicity pressure
lolikneri havaqatsu

Anonymous said...

looking representing ed drugs? [url=]buy viagra online [/url]and profit from sprung shipping at . another good place to [url=]buy viagra online[/url] is .

Penny Stock blog said...

Although warren buffett has been a great value investor over the years. He's not beyond falt. Warren buffet bought some banking stocks in ireland that did not work out. To all those of you that are Warren buffett fans' Warren has also stated on many occasions that his holding company berkshire hathaway will not deliver the great returns of the past simply because of its size it must invest for the most part in lsrge cap and mega cap stocks which generally do not produce really large returns.