Remain steadfast, embrace change, and don’t let short-term discomfort distract you from your long-term investing goals.
You can focus on a million different things in investing. But over time, a few things – a few skills, a few decisions, a few data points – tend to make most of the difference.
Four investing skills stick out in my mind:
1. Recognising the Difference Between Patience and Stubbornness. Two things are true:
Every asset goes through temporary out-of-favour periods, and the world changes, and some things fall permanently out of favour. Industries go through normal cycles, then they die. Investing strategies work for decades, then they stop.
Realising that patience plays the most important role in investing but that it shouldn’t be used blindly in every situation is hard. Employing it requires a combination of conviction and flexibility that can feel like a contradiction.
The trick – and that’s the right word – is realising that some behaviours never change, but the composition of the economy always does. Having a few immutable beliefs but even more that you’re willing to abandon is a rare investing power.
2. Having Low Susceptibility to FOMO (Fear of Missing Out)
The urge to buy an investment because its price went up means you probably don’t know why the price has gone up. And if you don’t know why the price has gone up, you’re more likely to bail when it falls – which can be the worst possible time to sell.
Quash the need to own what’s going up the most and you reduce the urge to abandon whatever eventually goes down.
3. Becoming Comfortable Being Miserable
And misery can come in many forms. Losing money can be miserable. So is the honest admission that your investment success might not have come entirely from skill. So is the inevitable doubt among your investors, co-workers, spouse, and friends during a stretch of losses.
The trick is not assuming you can avoid any of those but becoming comfortable and accepting when they arise.
4. Defining and Understanding What Game You’re Playing
Nobody should pretend a 17-year-old day trader has the same risk tolerance as a 97-year-old widow on a fixed income. Nobody should pretend they should have the same reaction to a piece of news. But we so often do by default – trying to find the “best” investment without understanding who we’re finding it for.
Many investing debates don’t reflect genuine disagreement; they reflect investors playing different games, talking over each other, upset that people who don’t want what they want can’t see what they see. Understanding your game without being swayed by people playing different games is an investing power.
