Two Minutes Reading with the Masters of Investing
Lou Simpson isn’t as famous as Warren Buffett, but for decades he quietly ran GEICO’s investments under Berkshire Hathaway. Buffett once called him a “topnotch investor with an outstanding long-term record.” That’s high praise and worth learning from.
Here are a few of Simpson’s timeless lessons:
1. Focus on the Big Picture 🌍
Simpson often said it’s better to look through the windshield than the rearview mirror. In investing, everything in the past is already known; the future is what matters. Predictions will never be perfect, but you need to think about what could go wrong as much as what could go right.
2. Know Why Sellers Sell 🤔
When buying a stock, Simpson always asked: “Why would someone sell this?” Sellers might be overreacting to short-term news. If you understand that and believe the business is still strong, you may have found an opportunity.
3. Don’t Sweat the Small Stuff 💵
He didn’t worry about nickels and dimes. The goal is to catch the “big middle” of a company’s growth, not to time every little price move. For example, if you believed in Apple in 2010, whether you bought at $30 or $32 didn’t matter holding long-term did.
4. Re-Evaluate Constantly 🔄
Simpson avoided “idea inertia” holding on just because you once liked a company. He bought Reebok but later switched to Nike when he saw it had the stronger brand. Investors should be willing to admit change and shift capital when needed.
5. When to Sell 🛑
Selling is harder than buying, but Simpson’s rule was simple: sell if the fundamentals change or if you find a clearly better idea. Don’t cling to a stock just because it once worked.
Why It Matters for Investors
For everyday investors, Simpson’s approach is a reminder to:
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Focus on business quality, not stock price noise.
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Think about risks, not just hopes.
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Stay flexible and willing to update your views.
It’s not about being perfect. It’s about staying rational, patient, and always focusing on the big picture the same principles that made Simpson one of Buffett’s most trusted partners.
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