When it comes to investing, there is only one authoritative figure that most experts will mention. And that is Warren Buffet.
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Over the years, he graces the financial world with his wisdom. All of his advice share a common ground, and that is TIME. This belief rings true because there is no successful person out there that didn't spend a significant amount of time to be where he or she is currently.
What Is the 20 Slot Rule?
"I always tell students in business school they'd be better off when they got out of business school to have a punch card with 20 punches on it. And every time they made an investment decision, they used up one of their punches, because they aren't going to get 20 great ideas in their lifetime. They're going to get five or three or seven, and you can get rich off five or three or seven. But what you can't get rich doing is trying to get one every day." - Warren Buffet
The rule is crystal clear. You only need at least 3 or 5 or 7 great ideas to be successful.
Why Putting a Limit Is Important?
"To me, it’s obvious that the winner has to bet very selectively. It’s been obvious to me since very early in life. I don’t know why it’s not obvious to many other people." - Charlie Munger VICE CHAIRMAN, BERKSHIRE HATHAWAY
If given limited options, you tend to take things seriously and spend a lot of time researching and weighing things before selecting (what you think based on data) the best option.
How Does This Apply to Investing?
In the Philippine Stock Market, there are more than 200 listed companies. Watching them all is not efficient, this is why you based your study on fundamentals or technicals or both. The result of this study will give you at least 20 stocks, which you can still narrow down to at least 7. Now, taking advantage of TIME will make you wealthy in the long term.
Aside From Investing, Where Can I Apply the Rule?
Warren Buffet's advice is not only limited to investing. His shared wisdom can be applied to any aspect of your life.
For example, if you are planning to put up a business, you can apply the 20 slot rule to list your business ideas. Because you only have 20 ideas to make, you will think of them carefully.
Some real world examples are:
- Elon Musk - He has several ventures. Three made him significantly successful. TESLA, SpaceX, and THE BORING COMPANY. Take note that this was not an overnight success. It took several years before it became successful (TIME).
- CryptoCurrency - Bitcoin was introduced way back in 2009 but only gained traction in 2012. It garnered worldwide acceptance in 2014. Now, cryptocurrencies are considered as a commodity (same as precious metals like gold). Many AltCoins are being introduced today, but in terms of profitability and adoption, only a few stands at the top with Bitcoin holding the #1 spot.
- Mang Inasal - There are many ways to cook chicken. They could have introduced a new menu to their line up. But Mang Inasal uses only one method (grilling) and added a twist (unli-rice), which is enough to make the business successful.
Takeaway
By limiting our options sometimes, we force ourselves to think things through and carefully choose what's best. However, this won't mean that we will not be experiencing setbacks. Failure will be waiting around the corner, but so is Success.
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