The Art of Saying No

Even the greatest investors and business managers come a cropper when they try to do too much. It’s best to keep it simple and say no.

Smart investor saying no
(Image credit: Getty Images)

Investing is the only profession in the world where experience can be just as much of a drawback as a benefit. Every market cycle is different and just because you were able to successfully navigate through one downturn, does not mean you will be able to get through the next. 

The list of formerly great investors who’ve blown up due to overconfidence in their abilities is endless. The latest figure is Carl Icahn, formerly a fierce corporate raider he’s lost somewhere in the region of $9bn shorting equity markets over the past decade and is currently engaged in a fight with the short-seller Hindenburg Research (which has cost him another $10bn plus). 

No investor is immune to the risks of overconfidence, but by looking at what has worked in the market over the past century -  and more importantly what hasn’t - we can improve our long-term odds.

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And there’s one strategy that seems to work better than most: the art of saying no.  

The biggest financial disasters 

Icahn isn’t the only Wall Street titan that’s suffered a fall from grace in the past few years. An even bigger player to have come unstuck is Chase Coleman, who manages the hedge fund, Tiger Global. 

At its peak in 2020, this fund's assets under management had swelled to a staggering $100bn, as its investments in private tech companies, and public market bets on tech stocks paid off handsomely. However, as tech stocks crashed back to earth in 2022, the fund’s performance followed suit. Assets under management collapsed by more than 50%.

Then there’s the debacle at Silicon Valley Bank. The lender operated a successful business for many years, but unlike most other banks, which tend to invest client deposits in liquid short-term assets, SVB decided to hold long-duration assets that lost value and then became difficult to sell in a hurry when the time came. 

Credit Suisse’s demise was more of a slow-burning crash. The bank tried to be too many things for too many people, and it learned the hard way what happens when you chase business without the right controls. 

And there are plenty of examples from history as well. 

The biggest business failure of all time, Enron began with the company’s rapid expansion into new markets outside of its core profitable business of pipelines. Enron’s managers wanted to do too much, and they ended up paying the price for straying too far from their comfort zone. 

Trying to do too much was also the reason behind the collapse of Royal Bank of Scotland. Under Fred Goodwin, the bank grew to be the biggest in the world, swallowing businesses in multiple sectors to get there. As it grew, it took on enormous amounts of borrowing, which led to its ultimate demise. 

In all of the cases above, all of the fund managers, investors and businesses had profitable, cash-generative operations, but they wanted more. They became involved in bets they didn’t need to make just in the hopes of turbocharging their performance. 

The thing is, sometimes this works. Sometimes businesses and investors can reap huge rewards from one trade or decision to target a different market, but this seems to be what US investor Warren Buffett likes to call a “Russian-roulette equation”: it can work, although some players will “occasionally die”. Is it worth taking the risk?

The art of saying no 

Saying no is one of the most important skills an investor can possess. Every day investors are battered with ideas, a new stock to buy, a theme to investigate or a derivative to buy. Most of the time these ideas are nothing but noise - and it’s important to tune them out and focus on what really matters.

There’s plenty of data to back up this conclusion (aside from the case studies above). Since 1984, independent investment research firm Dalbar Inc. has published its annual Quantitative Analysis of Investor Behavior report or QAIB. The report has consistently shown that investors are their own worst enemy, with overtrading cited as the main reason for investor underperformance.

Dalbar’s findings dispel the idea high active fund manager fees are to blame for investor underperformance. These fees do eat into performance, but many active fund managers perform far better than the average investor over the long run - it’s not the managers, but the investors making the biggest errors. 

All of this points to the key conclusion it’s best to find one strategy that works and stick to it. 

Carl Icahn made his money as an activist, and he’s still a feared corporate raider to this day, although his inability to say no to betting against the market has blunted his ability to wage activist campaigns. Chase Coleman was and remains a great growth investor, but his firm’s inability to say no to the tech-sector bubble in 2020 has cost his investors dearly. 

Enron, Credit Suisse and RBS should have said no to going out of their comfort zone. They didn’t and it ended in disaster. 

Finding what works 

Warren Buffett paid $25m to buy See’s Candies for his fledgling business empire in 1972. Despite several attempts to grow the business over the past five decades, it’s never expanded out of its core markets in the US, which some might view as a failure. 

However, See’s has been a huge success, it nailed its formula for success decades before Buffett bought the business and it has continued to follow the path ever since. In 2019, Buffett remarked the business had returned “well over $2bn” in pre-tax profit to the parent group, Berkshire Hathaway, since its purchase. 

See’s is one of the best examples there is of the power of saying no: finding one thing that works and sticking with it. Buffett is also an advocate of this approach. He turns down most opportunities and is happy if he finds one investment idea a year. 

Even that might be too much for most investors, who may be better off just buying a low-cost global index passive tracker fund and saying no to everything else. 

If you’d rather pick stocks it’s vital to stick to what you know, the sectors you may have experience working in or with. There’s no point in buying small-cap miners if you’ve never held a job in the mining sector - there’s just too much to understand and too much that can go wrong. Investors need to overlook the allure of extraordinary profits and say no to protect their wealth. 

As I’ve tried to outline above there are numerous examples of what can happen if they don’t say no when they’re on the verge of treading outside their comfort zone. 

Put simply, but using the word no more as an investor you could improve your odds of success and make your life a lot easier at the same time. 

Rupert Hargreaves

Rupert was the former Deputy Digital Editor of MoneyWeek. He's an active investor and has always been fascinated by the world of business and investing. 

His style has been heavily influenced by US investors Warren Buffett and Philip Carret. He is always looking for high-quality growth opportunities trading at a reasonable price, preferring cash generative businesses with strong balance sheets over blue-sky growth stocks. 


Rupert has freelanced as a financial journalist for 10 years, writing for several UK and international publications aimed at a range of readers, from the first timer to experienced high net wealth individuals and fund managers. During this time he had developed a deep understanding of the financial markets and the factors that influence them. 

He has written for the Motley Fool, Gurufocus and ValueWalk among others. Rupert has also founded and managed several businesses, including New York-based hedge fund newsletter, Hidden Value Stocks, written over 20 ebooks and appeared as an expert commentator on the BBC World Service. 

He has achieved the CFA UK Certificate in Investment Management, Chartered Institute for Securities & Investment Investment Advice Diploma and Chartered Institute for Securities & Investment Private Client Investment Advice & Management (PCIAM) qualification.