Beat the Stock Market by Ignoring It

You know what you’re supposed to do. Waiting for "fat pitches" is just as smart as walking away when you’re winning big at the casino. But if you never seem to be able to do either of those things, consider another way to beat the stock market: Ignore it.

Short end of the stick?

Think about your relationship with the stock market. Does it get the better of you, or do you get the better of it? Do you find yourself cursing Wall Street on a regular basis? Do you feel like Mr. Market walks all over you? Maybe it’s time to take control in this relationship and show the stock market who’s boss.

Many magazine articles have pointed out that Warren Buffett doesn’t have a computer, a Bloomberg terminal, or a Quotron matchine (back when they were still used). If an investor whose net worth fluctuates by hundreds of millions of dollars on a daily basis ignores the stock market, perhaps that’s a big hint for the rest of us as well.

Break up to make up

Fools should also refuse to have anything to do with Mr. Market unless he buys your friendship. If you read Warren Buffett’s shareholder letters, you’ll notice that the Oracle of Omaha is perfectly content to ignore Mr. Market for weeks, months, and even years.

In fact, Buffett’s only interested when Mr. Market gets extremely depressed, willing to part with his crown jewels for a song. Mr. Market’s bipolar disorder allowed Buffett to buy shares of stellar performers like M&T Bank (NYSE: MTB) and Torchmark (NYSE: TMK) at around nine times earnings, and Wells Fargo (NYSE: WFC) at a stunningly low five times earnings.