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Inactivity in investing.

Different people will have different criteria for the "perfect pitch". An investor should have very high standards for defining a perfect pitch since it should be "perfect". The criteria are simple to follow. Since one is pursuing a near perfect investing decision, invest only in "perfect" businesses (though there is no such businesses in the world, the nearest one can get is a near perfect business). Invest in such businesses at perfect price (perfect undervalued price; no doubt it is almost impossible to have a perfect price, one should still be strict about seeking really good near perfect bargain price to pay for the shares of a near perfect business). Sell only when it is most profitable (only when one has realised the full perfect returns from an invested company; e.g. the company has reached it's peak of performance in business and share price is grossly overvalued and there is no more incentive for holding it's shares).

A note also on building one's portfolio. When considering adding stocks of a new company to existing portfolio, one should only buy the stocks if the new company of consideration outcompetes those existing stocks in one's portfolio. This also ensures one settles for only excellent businesses and nothing less. Forgo the new stocks if the company of consideration pales in comparison to the existing ones in one's portfolio.

In conclusion, it is better not to make any decision if the decision is a sub-standard or average one. One must be extremely strict in investing and only make highly profitable decisions and nothing less. Buy very strictly (extreme undervalued price) and sell very strictly (extreme overvalued price). Also buy very heavily and sell very heavily at only best prices and nothing less. Select companies to invest very strictly (only invest in few top performing businesses and nothing less). In adopting a very strict investing principle, it means most of the time, one is not able to carry out any decision at all since the decision will be a sub-standard one. Inactivity thus works to the advantage of the investor when one only strictly carry out excellent decisions and settles for nothing less at all times. This is strictly swinging at perfect pitch and nothing less than that. Extreme strictness and extreme patience and good judgement........All are good investing virtues for making the few perfect pitches........

<Different investors may have differing definition of perfect pitch> <These are just my two cents worth to share>

 

Sounds good to me...except how define criteria for that PERFECT pitch?

 

To make the most profitable trade, only trade when it is most profitable to do so (when all odds are in favour). Imagine investing as having a punch card with only limited 20 lifetime decisions to make and no more. One will be forced to think very carefully when exercising every decision to buy or sell. One will also be inclined to only buy or sell in large amounts each time since there is limited number of decisions to make. Inactivity may strike one as an intelligent investing virtue. Only strike when the ball is at perfect pitch (when an investing decision is most profitable). When that moment comes, strike with all force (buy or sell heavily). If a batter keeps swinging the bat too often at the ball, the batter will exhaust himself before the chance for a perfect pitch comes. There is no incentive for swinging the bat at every ball since a batter has three strike chances anyway.

<Wait for the perfect pitch. When the perfect pitch comes, do not hold back but swing the bat out full force to rein in the perfect pitch. The waiting may be tough, but it is worth the patience as one only strike at perfect pitch and nothing less.>