In my previous post “Charlie Munger and the Miracle of Tax-Efficient Compounding,” I mentioned the importance of maximizing your after-tax return, but I failed to complete the thought. There are 2 great ways to do this: 1). Invest in a tax-advantaged account like an IRA or 401(k), and 2). With your taxable money, invest in a low-turnover index fund or in high-quality individual stocks and hold them long term.


I am a big fan of Morningstar. Their work on economic moats and fair value for stocks takes a lot from Warren Buffett’s approach. Here is some great advice from Joe Mansueto, their CEO, that makes me like them even more:

An investor should think like a business owner, not a renter. Most businesspeople don’t get up in the morning and ask whether they should sell their business that day. If they own a pizza shop, they don’t think about whether what they really should own is a shoe store instead. They show patience and persistence and try to understand their underlying business better so they can earn the greatest return for the longest period of time.

So investors are in many ways misled by stock-market volatility. The values of the underlying businesses just don’t change as quickly as stock prices do. You really don’t have to watch those changes hawklike day after day.

It is in a lot of people’s interests to get you to do something. Advisers and brokers earn commissions, fund companies want you to bring your assets to them. There are a lot of forces at work in the investment industry to get people to move, and there’s not really a countervailing force to encourage you to do nothing. But you should.

(h/t Josh Brown)


I’m also a big fan of Todd Wenning’s Clear Eyes Investing blog. Here is a link to his latest post “Exploit Your Advantages as an Individual Investor.” The subtitle of his blog says a lot: “Patience is the individual investor’s greatest advantage over the market.”


You may have noticed a theme running through these 3 mini-posts. The wisdom of all 3 is either directly from or derivative of the thoughts of Warren Buffett and Charlie Munger. They really are 2 of the all-time greats and they have been very generous in sharing their process and wisdom with anyone willing to pay attention. More Buffett and Munger and less CNBC in your investment diet means you will be a better investor and focused on the right things and the right time horizon.