I recently read another book by Larry Swedroe. Larry is a renowned financial author and advocate for passive investing. Being a former colleague of Larry’s, I have always admired his unique ability to educate people on how to not only win the investment game, but also win the far more important game of life. The following anecdote is taken from Larry’s latest effort – Think, Act, and Invest Like Warren Buffett: The Winning Strategy to Help You Achieve Your Financial and Life Goals.
An expert in time management was invited to speak to an MBA class. After a brief introduction she reached down and produced a very large mason jar and set it on a table in front of her. She then reached down again and produced a box filled with big rocks. She proceeded to remove the rocks from the box and carefully placed them, one at a time, into the jar. When no more rocks would fit inside the jar, she asked the class, “Is this jar full?” Everyone yelled, “Yes.” She then reached under the table, pulled out a bucket of gravel, dumped some in, and shook the jar. This caused pieces of gravel to work themselves down into the spaces between the big rocks. She continued this process until no more gravel could be placed into the jar. She then asked the class, “Is the jar full?” One student, getting the idea, answered, “no.” She then reached under the table, brought out a bucket of sand, and started dumping the sand into the jar. The sand began to fill the spaces between the rocks and the gravel. She continued until no more sand could fit into the jar. Once more she asked, “Is this jar full?” This time everyone shouted, “No!” She then grabbed a pitcher of water and poured until the jar was filled to the brim. She then asked the class, “What is the moral of the story?” An eager student raised his hand and said, “The moral of the story is that no matter how full your schedule is, you can always fit in one more meeting!”
The speaker replied, “Nice try, but that is not the moral of the story. The truth this illustration teaches us is that if you do not put the big rocks in first, you can never get them in.” To each of us, the big rocks mean something different, but at the core, the big rocks are those things that provide the richest meaning to our lives.
As a passive investor when I come home from my busy day, I get to sit down and enjoy dinner with my wife and children. Because I do not spend my time trying to beat the market, I also have time to excercise, read books, give back to the community, and focus on the other big rocks, the really important things in my life.
Investors following an active management strategy spend much of their precious leisure time watching the latest business news, studying the latest charts, reading financial trade publications, and so on. What they are really doing is focusing on the gravel, the sand, and the water. Therefore, even if they are among the very few who are successful at the game of active investing, the “price” of success may have been that they lost the far more important game of life.
The question for you to consider is what are the big rocks in your life? Is the “big rock” in your life trying to generate extra returns through active management strategies that require you to “invest” large amounts of your time? Or are the big rocks in your life time spent with your loved ones, on your faith, your education, your dreams, a worthy cause, or teaching or mentoring others?