Sit-on-Your-Ass Investing
Updated 2026-08-11
INTRODUCTION
English translation pending.
CORE DEFINITION
Sit-on-your-ass investing, Munger's deliberately blunt label, means buying a business you understand at a sensible price and then doing nothing for a very long time. The reasoning is that compounding needs an uninterrupted stretch on the same asset, while every trade resets the clock and adds taxes, spreads, and commissions. Munger called it the simplest idea in investing and the hardest to execute, because it requires resisting the urge to act. It is not passivity but a deliberate choice to let operating results set the return.
SCAFFOLDING EFFECT
Reduce cognitive load
- Thesis anchor: keep the original buy rationale visible so daily noise does not rewrite it - Sell test: define the few events that genuinely invalidate the thesis and ignore everything else - Cadence limit: set a fixed review interval instead of watching prices continuously
Anchor fast decisions
Compounding only works when the same capital stays invested across many periods, so frequent trading interrupts the very process that generates the return and adds taxes and spreads on top. Frequent activity also exposes the investor to short-term noise and personal emotion, converting avoidable volatility into realized losses. Choosing inaction is therefore an active decision that makes business results, rather than price movement, the source of return.
MINIMUM ACTION
In progress 0/1Practice this model in one real situation:
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Source support: Explicit
- mungermodels.comhttps://mungermodels.com/models/sit-on-your-ass-investingverified
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