{"id":5672,"date":"2026-04-17T10:22:30","date_gmt":"2026-04-16T23:52:30","guid":{"rendered":"https:\/\/strawman.com\/blog\/?p=5672"},"modified":"2026-04-17T10:22:30","modified_gmt":"2026-04-16T23:52:30","slug":"the-merits-of-mediocrity","status":"publish","type":"post","link":"https:\/\/strawman.com\/blog\/the-merits-of-mediocrity\/","title":{"rendered":"The Merits of Mediocrity\u00a0"},"content":{"rendered":"\n

In most fields, if you want to be in the top 1%, you generally have to perform feats that most others can’t. You need a rare, superhuman talent or a level of focus that borders on the pathological. But investing is a strange beast where the most mediocre path often leads to the most exceptional results.<\/p>\n\n\n\n

Well, at least if you measure success over any meaningful period of time. <\/p>\n\n\n\n

In the short run, the opposite is true. If you want to top the performance leaderboards over, say, one year, then you have to swing for the fences. A perfectly decent 10% annual return is no match for the punter who goes all in on a “meme stonk” which jumps 5-fold in a short space of time. The trouble is, the person who does that, and wins, is the exception to the rule. You don’t see the other 99% of traders who followed the same approach and only ended up blowing up their precious capital.<\/p>\n\n\n\n

Moreover, the person who gets lucky needs to somehow repeat that luck again the next year. And the next. And the next. The odds that you can do that erode in a geometric fashion that essentially renders such a strategy is impractical. Or, more accurately, disastrous.<\/p>\n\n\n\n

There are old generals and bold generals. But there are no old, bold generals.<\/em><\/p>\n\n\n\n

Now consider the investor who never tops the rankings, and is forever stuck in the middle of the pack. This investor is boring. They attract little attention and look rather mediocre. They ARE mediocre in most years.<\/p>\n\n\n\n

But over time they crush everyone else. Massively.<\/p>\n\n\n\n

By consistently avoiding the bottom quartile, they allow the internal combustion engine of compounding to work its magic without interruption. And that’s the key. As Munger put, “The first rule of compounding is to never interrupt it unnecessarily.<\/em>“<\/p>\n\n\n\n

That’s the problem with chasing big short term gains. Sure, you might get lucky, but if you don’t you face the very real chance of a permanent loss of capital. That’s a hard hole to climb out of.<\/p>\n\n\n\n

On the other hand, if you can avoid such things the maths of the universe takes over. You don’t need to be a hero. You don’t need to find the next world-beating tech giant in its infancy. You just need to survive long enough for the market to do the heavy lifting for you.<\/p>\n\n\n\n

To be clear, we’re talking about things from a portfolio perspective. At the level of individual stocks, there is a strong case to be made for leaning into a bit of risk. Yes, you’ll likely see most of these underwhelm, or worse. But a few big winners make all the difference.<\/p>\n\n\n\n

In 2022, Buffett noted that in his fifty-eight years at Berkshire Hathaway, he had made about three hundred capital allocation decisions. But only a relatively small subset actually moved the needle. Most were pretty ordinary, and a few were truly awful. But those handful of investments that did do extremely well made all the difference.<\/p>\n\n\n\n

It’s something that is effectively universal for all the great investors. They rarely top the rankings, but what they lack in short-term sizzle they more than make up for with consistency. Plenty of “meh” investments, a few home runs, and no irrecoverable, portfolio-wide losses.

They didn’t push for the right side of the risk bell curve. They sought to cut off the bottom tail. And they stayed in the game for as long as possible. <\/p>\n\n\n\n

The history of the ASX is littered with (seemingly) brilliant investors who had one or two legendary years before disappearing into obscurity. But long after their 15 minutes of fame is forgotten, the quiet, “mediocre” investors remain. Diligently plugging away, and focusing more on avoiding permanent capital destruction, than chasing the next moonshot.
<\/p>\n\n\n\n

Little drops of water,
Little grains of sand,
Make the mighty ocean
And the pleasant land.

So the little moments,
Humble though they be,
Make the mighty ages
Of eternity.<\/em>

–Julia Abigail Fletcher Carney<\/p>\n\n\n\n

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Members share research & recommendations on ASX-listed stocks by managing Virtual Portfolios and building Company Reports. By ranking content according to performance and community endorsement, Strawman provides accountable and peer-reviewed investment insights. <\/em><\/p>\n\n\n\n

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In most fields, if you want to be in the top 1%, you generally have to perform feats that most others can’t. You need a rare, superhuman talent or a level of focus that borders on the pathological. But investing is a strange beast where the most mediocre path often leads to the most exceptional results. 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