Survivor Bias: Why Successful Value Investors Live Longer

(Economic Journal) Charlie Munger, Warren Buffett’s longtime business partner, once reportedly remarked that “professors, judges and value investors live longer" while reporters, alcoholics and smokers live shorter lives.

Now, why would value investors live longer?

Compared to value investors, quick trading and speculation might be the preferred approach of many market participants.

But speculation can be very stressful. The volatility of return is high, something not everyone can cope with.

The way I see it, gunning for short-term profit is almost like gambling. And the desire to make profit all the time can create a lot of pressure. Traders of this sort often resort to drinking and smoking to handle the stress, and are therefore dying earlier.

Value investing is different. It’s more about rational thinking, staying focused and having a lot of patience.

Just imagine if you are sitting in a quiet office in Omaha, you just make a handful of big investment decisions every year. You spend rest of the time reading and thinking. The lifestyle is much more enjoyable than working in a noisy trading room in New York or London, and you have to keep a close watch on what’s going on all the time and adjust your portfolio constantly.

Buffett will be 89 years old in less than two weeks, while Munger is already 95.

I guess being happy is the secret to longevity.

When you are doing the right thing, your body will create good hormones.

Buffett drinks coke every day, but he’s still very healthy. He tries to find undervalued stocks through constant fundamental analysis. Then he just waits for the company to grow. The whole process is very interesting.


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