What Is the Willie Sutton Rule?
Let me explain the Willie Sutton Rule to you directly. It's based on a statement from the notorious American bank robber Willie Sutton. When a reporter asked him why he stole from banks, he replied, 'Because that's where the money is.'
What this means is that if your goal is something specific like money, you shouldn't waste time searching in obscure or unreliable places. Instead, take the straightforward path that offers the least resistance and the highest chance of success by going right to the source. You can apply this rule in many areas, from investing to medicine, science, business, and accounting.
Key Takeaways
- The Willie Sutton Rule states that your first choice should be the most obvious route.
- Named after bank robber William Sutton, the rule applies to investors by suggesting they seek out low-hanging fruit first before trying more obscure strategies.
- In medicine, the rule suggests ruling out the most likely diagnosis for an ailment first before exploring uncommon conditions.
Understanding the Willie Sutton Rule
Some historians connect the Willie Sutton Rule to Arthur Conan Doyle's detective Sherlock Holmes, who said, 'When you have eliminated the impossible, whatever remains, however improbable, must be the truth.' Both ideas align; they just approach conclusions from different angles.
In the financial world, I see the rule as similar to 'picking the low-hanging fruit.' If you're aiming to make money in the stock market, start with positions that are clear and straightforward. They might not be the largest opportunities, but you know exactly what you're dealing with. Only after addressing those obvious choices should you move deeper into more uncertain areas, where things could turn out rotten or fail to develop.
Another perspective on investing and the Willie Sutton Rule is that it emphasizes focusing on activities that generate high returns, rather than wasting effort on frivolous actions with lower yields. This applies to accounting as well. In management accounting, the rule indicates that you should use activity-based costing—prioritizing by necessity and budgeting accordingly—on the highest costs, because that's where you'll find the largest savings.
Willie Sutton Rule and Medicine
In medicine, the rule comes into play when doctors make diagnoses. It suggests focusing first on the obvious possibilities and conducting tests to confirm the most likely diagnosis, rather than jumping to rare conditions. This method can lead to faster, more accurate results and avoid unnecessary costs from irrelevant tests.
Medical students often learn this as Sutton's Law. It states that when diagnosing, you should start with the obvious and test for the most probable issues first, instead of chasing uncommon ailments. This approach delivers quicker, more precise outcomes while cutting out wasteful expenses on unneeded tests.
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