It’s not really about brains. Many smart individual investors know exactly what they need to do, but their Achilles heel seems to be that they lack the ongoing, consistent discipline to focus on their positions.
“The stock market has a very efficient way of transferring wealth from the inattentive to the attentive.” Thank you, Warren Buffet.
They fail to embrace the fact that owning and monitoring investments is a Sisyphean task. Having lived in San Francisco, the analogy that springs to mind is the painting of the Golden Gate Bridge. That iconic bridge is so enormous that as soon as you finish painting the bridge at the north end, you must immediately start again at the south end. Rust never sleeps in the fog of San Francisco! Neither do your investments.
Try thinking about monitoring your assets within these 4 stages:
- Do whatever it takes to discipline yourself to watch your positions.
- Then see it! You score big points for clarity, and you lose big points for the sin of invisibility. Basically, you must align your perceived reality with the market’s reality. The future belongs to those who clearly see the present.
- Believe it! Believe what is happening, not what should be happening. Stop second-guessing yourself, stop worrying and stop trying to figure out why. Embrace the facts or else, like an institutional manager, the market will fire you.
- Act! Don’t procrastinate. Have the courage of a fireman who is willing to run into the fire while the crowds are moving in the opposite direction.
In closing, I’ll revisit what I wrote before: “Once you believe and embrace the reality that a meaningful percentage of your profitability as an investor is determined by how you rule the “monitoring kingdom” that resides between buying and selling, the closer you will be to achieving stock market mastery.”
Trade well; trade with discipline!
-- Gatis Roze
