“The trick is, when there’s nothing to do, do nothing.” That is the homespun wisdom of the decidedly unexcitable Warren Buffett, and it seems to have served him well. But most people in finance could not act on the investment sage’s advice even if they were temperamentally inclined to do so. They profit from trades, get paid for deals, earn commission on transactions. Without activity, there is no business.
Mr Buffett’s good fortune is, he says, that he does not “get paid for activity, just for being right. As to how long we’ll wait, we’ll wait indefinitely”. Almost alone in his industry, Mr Buffett is allowed to wait indefinitely, because he has acquired a reputation for being right.
I am in France at the moment, finishing a book about finance, which seems a world away from the events that have dominated the local news. The response to the massacre in Paris last week was deeply moving: there were spontaneous gatherings on Wednesday and Thursday evenings; “Je suis Charlie” signs are displayed everywhere. The scale of Sunday’s demonstrations was extraordinary — an estimated 1.5m people in Paris, while in the southern town where I live, 10,000 people (out of 30,000 who live here) marched silently through the streets. French people talk a lot about solidarity: they have shown that such talk is not empty.
And yet as I finished a chapter entitled “The bias to action”, I realised there was an important lesson here. In the face of an event like the attack on Charlie Hebdo, the urge to respond decisively is natural and strong. Nicolas Sarkozy, the excitable former president who managed to push his way to the front of the crowd on Sunday, has already put forward numerous suggestions.
Mr Buffett would pass, and Mr Sarkozy fail, the so-called marshmallow test — refrain for a few minutes from eating the marshmallow in front of you and I will bring a second one, at which point you can eat both.
Frank Partnoy’s little book Wait, on the joys of procrastination, explores the issue of how long one should delay before acting; a famously silly experiment found that the best time to receive a kiss from a favourite movie star was a week from now — soon enough to excite, far enough away to savour.
But the bias to immediacy and action is as pervasive in politics as in finance, and Mr Buffett’s readiness to wait — and his reputation for being right — are correspondingly rare.
In Britain, the Terrorism Act 2000 was, perhaps reasonably, thought to be inadequate in the light of the attacks of September 11 2001, which led to the quick passage of the Anti-Terrorism, Crime and Security Act 2001. These powers were extended in the Prevention of Terrorism Act 2005, which was insufficient to prevent that year’s attacks in London and was followed by the Terrorism Act 2006. The Counter-Terrorism Act 2008 was next, and, even before the latest events a new counter-terrorism bill is going through parliament.
Even if there is nothing to do, do something. Mr Sarkozy hopes to run again for the presidency (and must fend off a challenge from the far-right Marine Le Pen). A British election is imminent, and Theresa May, the home secretary and sponsor of the counter-terrorism bill, is a potential Conservative leadership candidate. Sometimes, as after 9/11, something must be done; but with hindsight, less — a focus on tracking down Osama bin Laden — might have been more.
Politicians around the world are holding meetings this week to persuade us that something is being done. But the power of millions of people on the streets of France, engaged in a reassertion of “liberté, égalité, fraternité” — and the values of free speech and democracy — is far more reassuring. As Mr Buffett has put it, “when you are right, you can wait indefinitely”
This article was first published in the Financial Times on January 14th, 2015.