Have the Discipline to Say No 133While discipline alone will not completely insulate you from
the painful consequences of blind greed, it will have a signifi cant
impact on your success as a long - term investor. Most important, dis-
cipline can be the difference between surviving and getting wiped
out. Time is an investor ’ s best friend. If you are able to ride out the
worst storms with your armor relatively intact, that means you are
around to participate in some of the market ’ s better buying oppor-
tunities. While Warren Buffett ’ s investment acumen is without ques-
tion, it ’ s his disciplined approach to his craft that truly sets him
apart from the rest. Buffett ’ s discipline is so unwavering that even
as he became best friends with Bill Gates and often was advised by
Gates to invest in Microsoft, Buffett still refused to do so except for
a token 100 shares just so he could receive the annual reports. Even
after years of learning about the tech industry from Bill Gates him-
self, Buffett remained disciplined and said no. Buffett easily could
have invested $ 100 million without any meaningful consequence to
Berkshire Hathaway. He would have been able to do so after being
told about the future of industry, where it was going, who the domi-
nant players would be — which included Microsoft — but he still he
refused to invest in any signifi cant way. While many might argue
that Buffett ’ s discipline has cost him numerous lucrative investment
opportunities — Microsoft and Wal - Mart some 20 years ago might
have been the biggest — the real value is found when you invert the
argument.
Buffett ’ s discipline has enabled him to avoid potentially larger
losses than any of his missed opportunities might have created.
Having the discipline to walk away from an investment in spite of
a favorable consensus view reveals a nonemotional, independent
frame of mind, one of the most prized qualities in all of investing.
And best of all, this quality doesn ’ t require you to have a high IQ
but only a disciplined approach.
Ultimately, the key to Buffett ’ s disciplined approach has been
his strict adherence to staying within his circle of competence. TheCH007.indd 133CH007.indd 133 9/2/09 11:47:23 AM9/2/09 11:47:23 AM