I’m a general adult psychiatrist. I treat many cases of ADHD (Attention Deficit Hyperactivity Disorder). For a patient, ADHD may mean you’re funny, charming, quick-witted, good at sports and great in a crisis. But it can also mean you speak out of turn, can’t stay focused, switch topics, get into accidents, get divorced and get fired. It can also mean you are more likely to develop substance abuse or gambling problems, get in trouble with the law and end up broke. The central problem of ADHD is not being able to keep your attention focused for a long period of time — what’s popularly known as “a short attention span.”
As a psychiatrist I probably help ADHD patients more effectively and more quickly than any other patients I treat. The most effective treatments are stimulants: on them, short attention span ADHD patients can go from C to A students and from unhappy, underemployed workers to successful entrepreneurs. It’s not a matter of feeling more stimulated as a non-ADHD person would. It’s because they are now focused and can sustain a longer attention span. They can see past a day’s work to a life’s work. They can see the forest for the trees. They tell me it’s like putting on glasses for the first time.
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Which leads me to the way some of us approach the stock market. The untutored stock market investor seems to behave an awful lot like an ADHD patient. They want to hop in and out of “hot stocks” and make “quick bucks.” They don’t want to invest long term but instead to speculate and gamble. Quickly buy and sell, and take the profits. Repeat it often enough and, presumably, get rich quick.
They may even know someone who did. But they won’t know a lot of people who did because that strategy — if you can call it that — rarely works. And it never works long term. Talk to people who made money quickly in the stock market, and you will often find they no longer have it. Their millions are just a bittersweet memory. They lost their found money chasing another hot stock, or they didn’t sell before their high flyer tanked.
In interview after interview, the great investor and polymath Charlie Munger attributes his breathtaking success not to intelligence but to rationality and a long attention span. His approach is the polar opposite of investor ADHD.
Munger echoes the ancient wisdom of Blaise Pascal, the mathematician and physicist. Over three hundred years ago Pascal mused that, “All of humanity’s problems stem from man’s inability to sit quietly in a room alone for any length of time.” Or, more simply, just to wait.
How can we learn patience? How can we learn the wisdom of long term, diversified, low-cost investing in a world of clicks and texts, where a short attention span is a new ideal, and sitting alone in a room waiting sounds like a loser’s game?
Warren Buffett’s chief mentor in his youth was Benjamin Graham, a professor at Columbia University’s School of Business. Graham taught that in the short run, the stock market is a voting machine. But in the long run, it is a weighing machine.
To put it in plainer terms: In the short run, the market is a casino where you can lose your shirt. But in the long run the market is a discount garden center where you can buy money trees that grow for the rest of your and your descendants’ lives.
The choice would appear obvious. Similarly to my short attention span ADHD patients on stimulants, you need to be able to calm down, focus, and think and invest for the long term, like Buffett and Munger. In fifty years, their Berkshire Hathaway shares have gone from $16 to $300,000! That’s what Charlie Munger calls “sit on your ass investing.” Or to put it more delicately, investing à la Blaise Pascal.