Arrogance vs. Simplicity in Investing: Why Humility Wins Every Time

Investing Isn’t About Being Clever

When I look back at my days of whitewater river guiding, I remember one lesson vividly: what looks simple from above can be deceiving. You glance at a rapid, think it resembles something you’ve conquered before, and tell yourself, “I’ve got this.” But the moment you’re in it, the water is far more complicated than it appeared.

That’s arrogance in action — thinking we know more than we do. Investing works the same way. From the outside, the stock market can look predictable. We might think, “I’ve read the reports, I’ve done my homework — I’ve got this.” But without humility, that confidence turns dangerous. Arrogance blinds us to hidden risks.

Simple Doesn’t Mean Easy

Warren Buffett has said countless times that investing is not a contest where the smartest person wins. It’s not about being a genius with a 160 IQ outsmarting someone with a 100 IQ. It’s about keeping things simple and sticking with a process that works.

The Rule #1 strategy is straightforward: buy wonderful companies on sale, with a margin of safety, and hold them long-term. Simple. But that doesn’t mean it’s easy. The difficulty lies in staying patient, resisting arrogance, and refusing to chase after complex, high-risk opportunities just because they look impressive.

Buffett often talks about jumping over “six-inch bars” instead of “six-foot bars.” The six-inch bars are the obvious opportunities — when a company you understand is on sale because the market panicked for reasons unrelated to its long-term value. Those are the investments worth making. The six-foot bars? That’s where arrogance leads you. And that’s where investors fall flat on their faces.

The Importance of Sticking to Principles

You can fill a notebook with research on a company. But if you allow arrogance to creep in, you might convince yourself to ignore a fundamental Rule #1 principle. Maybe the company doesn’t truly have a durable competitive advantage, or maybe it’s not in a dominant market position. Yet arrogance whispers, “It’ll be fine.”

That’s where investors get into trouble. It’s not enough to know the principles — you have to stick to them. Humility reminds us that exceptions rarely pay off. The Rule #1 checklist exists to protect us, and every box needs to be checked before making an investment.

The Individual Investor’s Advantage

Here’s the good news: as individual investors, we have an advantage that Wall Street doesn’t. Professional money managers are pressured to constantly buy and sell. They can’t afford to sit on cash, even when no good opportunities exist.

We, on the other hand, don’t have that pressure. Nobody’s looking over our shoulder demanding results every quarter. That means we can wait. We can sit in government bonds or cash for months, even years, until a six-inch bar finally shows up.

That patience is a superpower. And it’s exactly why Rule #1 works so well for individual investors like you and me.

Why Humility Matters

Arrogance tells us we know what’s coming. Humility reminds us that we don’t. That’s why Charlie Munger often says: “Stay pessimistic.”

Now, he doesn’t mean to be negative or fearful. What he means is — always test your thesis against the worst-case scenario. What if the company’s growth slows? What if the economy contracts? What if a competitor gains traction? If the company still holds up under those scenarios, you’re looking at a strong investment.

Optimism gets us to put our money to work. But humility ensures we put it in the right place.

Conclusion: Keep It Simple, Stay Humble

The stock market doesn’t reward arrogance. It rewards patience, discipline, and humility. The Rule #1 way is about keeping things simple: buying wonderful businesses on sale and sticking to principles no matter what.

The next time you feel yourself getting overconfident, remember Buffett’s six-inch bars. Remember Munger’s advice to stay pessimistic. And most importantly, remember that humility is your greatest asset as an investor.

If you’re ready to learn how to apply these principles step by step, join me at our Rule #1 Investing Workshop. It’s three days of learning exactly how to find those six-inch bars and invest with confidence — without arrogance.