Buffett's "20-Slot Rule"
Happy Thanksgiving everyone!
Thanksgiving was my favorite holiday as a kid. It was always the most dependable. Every Christmas was a bit of a crapshoot. You never knew how many gifts you would get or if you were traveling or staying home. But you always knew what you were getting for Thanksgiving – food, family, friends, and football.
Coming from a Chinese immigrant family, we rarely did the whole American Thanksgiving feast of turkey, stuffing, mashed potatoes, etc. Our Thanksgiving was usually a potluck of Asian foods at one of our friend’s homes. It wasn’t a traditional Thanksgiving but it was our tradition and the most important ingredients of food, family, and friends were there.
Over time, Thanksgiving started to lose a bit of its significance for me. I think this can happen to a lot of us as we grow up into adulthood, especially during that post-college / pre-kids phase. Life priorities shift away from the things that the holidays represent – family, gratitude, and joy, towards things like career advancement, partying, etc. As the years stack up, the holidays have a way of coming and going. Even the big important ones like Thanksgiving and Christmas start blending in with the random ones like President’s Day and Columbus Day. The holidays end up becoming more about the day or two you get off from work than anything else.
Now with a family of my own, my life priorities have shifted again and making the holidays a special occasion for our family has been more top of mind. It’s not that Julian or Serena will remember anything about this specific Thanksgiving or any this decade, but it’s more for us to start creating the traditions today that will last through the rest of their lives (or until they start forming traditions of their own with their families). Hopefully they’ll look back one day on these fondly just like I do with my own childhood memories.
This year, I decided to roast my first turkey ever for a Friendsgiving that we hosted at our place. I wanted to start a new tradition and wanted to do it right. I got a recipe from a chef friend (h/t Sean), drove out to Flushing the weekend before to get a live bird, spent the day before prepping, and roasted that turkey for 5 hours the day of. I'm glad to report that it came out pretty good! Not only because I had a great recipe but because I cared about what I was doing and for the family and friends I was doing it for. I think the most important thing when doing anything in life is your attitude when doing it. That extra level of care will always come through in the final product no matter if it's a Thanksgiving turkey, project at work, or anything else.
From our family to yours, we wish everyone a happy and restful holiday season. Holidays are a time for all of us to wind down, relax, and be with the people that you love. Also remember it’s not just about being with them physically while staring at your phone (guilty!) but really be with them and present!
Warren Buffett's "20-Slot Rule"
As we approach the end of the year, this is the best time to reflect on 2024 and look ahead to 2025. I think of every year like a new season for a professional athlete. The first fifty-ish weeks are when you need to perform and the post-Thanksgiving to New Year period is the offseason for you to rest, recover, and prepare for next year. You might will also get a little fat and that’s okay.
I recently came across this mental model from Warren Buffett that I found helpful to keep in mind as I prepared for 2025. He dubbed this the “20-slot rule” and describes it like this:
Imagine you were given a punch card with 20 slots representing all the investments you are allowed to make in your lifetime
One of those slots gets punched out every time you make an investment
Once it’s exhausted you can’t make any more investments
It’s a useful framework to force you to consider more carefully where you would invest your money if you only had a limited number of investments you can make throughout your life. You wouldn’t want to use one of those slots for any run-of-the-mill investment. You would want to make sure it moves the needle.
Over the course of his incomparable investment career, Warren Buffett mastered the art of "waiting for the fat pitch". He was willing to let countless opportunities pass by until he saw the one “fat pitch” he would load up and use one of his slots. If you look at Berkshire Hathaway’s portfolio today, it’s the antithesis of a diversified portfolio with 60% of its value in its top four positions – Apple, American Express, Bank of America, and Coca-Cola. Take these four and a handful of others away from Buffett’s track record and you get a performance that is merely good not GOAT.
That’s the value of patience and focus.
I’ve been thinking a lot about this “20-slot rule” in the context of life more broadly. In life, the currency you invest is your time and energy. Both are finite resources. They are your "20-slots". It's up to you on how you want to allocate them. You can split them across a whole host of different pursuits or you can focus on one or two and make true progress. As you look ahead to 2025, think about what parts of your life needs more focus and what inessentials can be shelved (you can always come back to them!)
One of my favorite quotes comes from Michaelangelo as he described his process for carving David out of a single block of marble: “It’s simple, I just removed everything that wasn’t David”. Sometimes the best thing we can do for ourselves is to subtract.
Simple, brilliant, and definitely not easy.