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Rational investing requires a major time commitment [ClearOnMoney]
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Rational investing requires a major time commitment

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Commentary

Rational investing requires a major time commitment

1 Nov 2012 by Jim Fickett.

I'm always amazed when the case for a particular investment is made in a paragraph, or perhaps a few paragraphs, in the popular financial press. It is never that simple. This issue was nicely brought to the fore in a recent Business Week piece on Ted Weschler, who recently joined Berkshire Hathaway as a portfolio manager.

Like Buffett, Weschler sought an edge by studying company filings and dozens of other publications to understand industries. He once told [Michael David, a former colleague and friend who now runs a hedge fund in Akron] that he didn’t make investments unless he’d spent 500 hours studying the idea. “He’d go on vacation and take 10-Ks and 10-Qs with him,” says David, referring to the reports publicly traded companies file to the Securities and Exchange Commission. “He still does.”

There are exceptions – in early 2009 you could safely buy almost anything. But generally, I think 500 hours is in the right ballpark. In my view, if you don't have that kind of time to spend choosing individual investments, you should probably spend that kind of time choosing a few professional investors whose views you can then trust, and either follow their recommendations or put them in charge of your money.