Thursday, September 7, 2023
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Why Most of Us Are Bad at Investing

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…because most of us in the stock market, most of the time, do not do investing, which is…

  • Thinking how markets work,
  • Understanding how other investors behave and why not to behave like most of them,
  • Studying businesses,
  • Sticking only with what is simple and what we understand,
  • Buying stocks at appropriate valuations,
  • Owning those businesses knowing they are ‘businesses’ and not just symbols on your screen, and
  • Being patient with those businesses and holding on till they remain good businesses.

Instead, we are busy…

  • Envying (others making money fast or losing money slow),
  • Cloning (others’ stock ideas mindlessly),
  • Predicting (future of markets, stock prices, and economy),
  • Fearing (missing out on future gains),
  • Regretting (past mistakes),
  • Avoiding (accepting current mistakes),
  • Denying (reality, especially when it’s harsh), and
  • Indulging (in useless information and noise)

And if that’s not all, these often lead us to –

  • Trading (frequently, which adds to our costs),
  • Averaging down (on bad businesses),
  • Boasting (about our lucky short-term gains), and sometimes
  • Trolling (other investors on social media, who have not performed as well as us in the recent past).

With such a busy schedule, where is the time to practice investing?

Countless wise people have advised us for centuries that to become good at anything, we do not need to always add more things but give up on some of them.

However, when it comes to investing, giving up on everything mentioned above is not as easy as it sounds. All these (mis)attributes and (mis)behaviours make us human (except trolling others), and thus there is no point trying hard to eliminate all of them from our lives at one go.

But if we work towards minimizing these – some starting today, and others over a period of time – we may end up with an outcome better than we had ever imagined.

I would leave you with a couple of quotes, which signify how what we think and do now, help us create our destinies –

Watch your thoughts; they become words.
Watch your words; they become actions.
Watch your actions; they become habits.
Watch your habits; they become character.
Watch your character; for it becomes your destiny.

– Lao Tzu

You are what your deep, driving desire is.
As your desire is, so is your will.
As your will is, so is your deed.
As your deed, is so is your destiny.

– Brihadaranyaka Upanishad

For good or bad, investing does not follow any other path.



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