Forty thousand people descend each year on a convention centre in middle America. They're there to learn from Warren Buffett and Charlie Munger, two of finance's best minds. But the hero worship runs deep. Slapping a value investor's mother is safer than critiquing their idol. And few of Buffett's commandments get more head nods than to 'wait for a fat pitch', a baseball analogy that means an easy-to-hit ball. Buffett uses this phrase to suggest you hold cash until you find an excellent investment. The idea is intuitive and sounds sensible. But for most of us, waiting for Godot will make us poorer than we would otherwise be.
First, the opportunity cost of doing nothing is enormous. American stocks have returned 9.6% per year on average over the past century. If you had a hundred bucks and waited a year, on average, you would have had to buy something worth $110 for that same $100. In five years, it would be $158, or a 37% discount. While ten years of thumb-twiddling would have put the …