The great paradox of investing is that it is an activity obsessed with predicting the future, even though the future is inherently unpredictable. Enormous ink is spilt forecasting tariff rates, interest rates, policy shifts, all while knowing that what matters most is rarely visible in advance.

Don’t believe me? Imagine being told on January 16, 2020, that a virus would cause a global pandemic that would shut down the world—no work, no travel, no social life. If you knew this in advance, you would almost certainly sell all your stocks and thus avoid the roughly 25 percent drawdown in the S&P 500. But you almost certainly would not have bought back in six months later, in the middle of the COVID storm, when the S&P 500 had already returned to its prior high—before going on to rally 230% of its pre-COVID high over the next five years. The market marched upward relentlessly, even as wave after wave of the pandemic engulfed the globe.

The point is simple: Even with perfect foresight about the macro event, it is still impossible to know the correct portfolio action. And yet, the instinct to predict persists because prediction creates the illusion of control, the comforting belief that uncertainty can be mastered with enough intelligence, data, or effort.

Stock markets are designed to provoke action. Prices move, narratives shift, news breaks, experts speak. Each fluctuation carries an implicit demand: Do something. In such an environment, activity feels like engagement, and stillness feels like neglect.

Yet the paradox is this: The vast majority of long-term investment returns are earned during periods when nothing appears to be happening. Doing nothing, when done deliberately, is not passivity. It is discipline. Time only works for you if you allow it to.

When I look back at the investments that have mattered most, their success was not determined by frequent intervention. Instead, their success derived from long stretches of inactivity punctuated by rare, decisive action. The work was front-loaded: understanding the business, the incentives, the durability of demand, and the quality of management. Once that work was done, often the optimal behavior was to step back.

This is much harder to do than it appears. Our instinct is to not sit through volatility. Loss aversion, social cues, and recent experience make inaction feel like negligence. Too often, investors let price movements define their understanding of a business, rather than the other way around. In those circumstances, the market stops serving them and starts directing them—usually at the expense of long-term compounding.

Examples of such counterproductive behavior are familiar to us all: trying to sell before the next recession, trying to buy before the next bull market, “repositioning” portfolios on the basis of what might do better in the new paradigm, dumping stocks during a downturn. All these actions can deprive us of the means to eventually recover.

People do these things because these actions feel intuitive, because these actions appear rational in the face of heightened concern and uncertainty. This is precisely why compounding over the long term is so challenging and rare: It demands counterintuitive and seemingly irrational behavior inaction.

That said, inaction does not mean neglect. It does not mean buy and forget. It does mean continuously monitoring whether the moat is widening or narrowing, whether management ambition remains aligned with shareholder outcomes, whether incentives have shifted, and whether the quality of the franchise is strengthening or eroding. This is hard work and, in the best-case scenario, results in inaction.

The world’s most famous buy-and-hold investor, Warren Buffett, bought and sold hundreds of stocks over his career as his views on individual businesses changed. And yet, even today, just five companies account for roughly 85 percent of his portfolio and have delivered over 90 percent of the total dollar gains he has made in public equities. The greater mistake, more often than not, isn’t buying a weak business—but selling a great one too early.

But inaction works only when paired with a high standard for action. The fewer decisions you make, the more significant each one becomes. This is where simplicity matters. Simple businesses are easier to hold because their logic doesn’t change every quarter. When economics are stable, volatility becomes information, not instruction; complexity, by contrast, hides assumptions.

This becomes clearest in banking, where mistakes are unforgiving. A bank is a leveraged institution that cannot afford to be “mostly right.” Survival depends on a small number of actions done consistently well. The best bankers rarely speak with confidence about the macro future. Instead, they obsess over balance-sheet strength, liquidity, underwriting discipline, incentives, and culture. Leaders like Uday Kotak and Jamie Dimon built their reputations not on bold forecasts but on simplicity, prudence, and alignment—strong capital buffers, clear risk limits, and the understanding that, in leveraged systems, endurance matters more than brilliance.

This mindset is not limited to banking. It applies equally to investing.

I find more comfort in owning a small number of businesses with simple economics and aligned incentives than in holding a broad collection of ideas that require constant interpretation. Not because concentration is virtuous but because understanding reduces the need for action.

What experience has taught me is that the more a decision depends on a specific future unfolding, the more fragile it is. The investments that have worked best were rarely those for which the future played out exactly as imagined. The most successful investments were the ones that remained sound even when it didn’t. They made inaction seem like the most rational decision and allowed compounding to work—patiently, invisibly, and powerfully.

Shiv Puri
Founder and Managing Director, TVF Capital
Chairman, Vesta Global