The Trap of "Action Bias"

A former colleague had a wonderful aphorism: a person’s greatest strengths can also be their greatest weaknesses. Traits like being highly detail-oriented or deeply creative are invaluable in the right context, yet problematic in the wrong one.

Investing is no different. Long-term thinking is widely regarded as a virtue and a source of superior returns. Yet, taken to excess or misunderstood, it can become an enemy. When there is too much time to fill, the temptation is to intervene, to make changes that do not need to be made.

If capital is managed patiently and wisely, long-term results tend to follow. But if we constantly “pull up the plant to inspect the roots”, endless reviews and adjustments prevent anything from truly flourishing.

The real discipline is to remain engaged without being reactive. An overactive investment committee can become a risk to itself and those it serves. Often, quiet patience, not constant action, is the soundest course, unless something is genuinely wrong.

And the same colleague had another wonderful aphorism: progress is simply replacing one problem with (usually) a smaller one....