Buffett’s punch card tip

Buffett said that investors could improve their returns if they were simply given a punch card with 20 slots. Each time an investor made a new investment they would punch a slot. Each investor would only get to make 20 investment decisions over their lifetime. This Buffett contends would force people to give a greater amount of thought to their investment decisions and thus make better decisions.

There are a few pieces of wisdom in this tip. First, there are a lot of forces prevailing upon us to make decisions, lots of them, and as a consequence we don’t give our decisions a lot of thought. Instituting a mental punch card forces us to slow down and think through our decisions to make sure we are making the best decision we can make.

The second bit of wisdom in Buffett’s punch card tip is that you don’t need to make a lot of decisions to achieve remarkable results. Throughout his career Warren Buffett has learned that you only need to make a few smart decisions to achieve great returns. Buffett doesn’t take just any investment pitch that’s thrown his way. He waits, and knows that he only needs to make a few smart decisions. For example, Buffett invested just over $10 million in the Washington Post Company in 1973. Today that investment is worth just north of a billion dollars. You only need one decision like that in a lifetime to be a successful investor.