Guest Post: I Wasted 2 Years Because Books on Investing Don’t Teach This Money Lesson
Your money vs. your character
Happy Friday, everyone. I have a special treat for you heading into the weekend: a guest post from one of my favorite finance writers,
who writes the Substack .Denis had submitted dozens of articles to MOAM back when this publication was on a different platform. I am thrilled he is on substack and that I have the opportunity to share his writing with you all.
If you haven’t already, consider subscribing to
after reading this article.You expect too much from books on investing.
They may contain more academic information than The Encyclopaedia Britannica. But you’ll still not make any money.
Because the books don’t explain how to handle your own emotions.
Your Investing Skills Hardly Matter
I was seriously thinking of investing in the stock market in 2018.
But I was scared and took no action.
“The stock market is one big speculation. Why the hell should I want to lose money?” — I thought.
I fell victim to my own ignorance. I had never learned about investing and based my opinion on what he said, she said.
Dumb.
I finally took to reading and learned that you can make good money on stocks long-term!
There’re Price-to-Earnings and Price-to-Book ratios that help you find undervalued stocks. Such simple yet powerful advice. Thank you, Mr. Benjamin Graham, for the great teachings in The Intelligent Investor.
You may go on and learn to invest in Common Stocks and Uncommon Profits by Philip Fisher. Your analysis will culminate in the question you should ask before you buy a stock:
“What does the company do that others don’t?” — Philip Fisher
Kudos to Mr. Fisher. It takes a genius to summarize the entire investing philosophy in a single question.
There’s one problem, though. A serious one.
The books assume you’re a machine devoid of emotions.
Stocks go up? Happens all the time.
Stocks tank? You don’t care.
The books say nothing of your emotional self-control when you see your wealth wiped out in a matter of days. Such is the fast-paced stock market of the 21st century.
I was looking for an answer to this as I was reading books on investing. Warren Buffett says your temperament decides how much money you’ll make in the stock market. Your investing skills hardly play any role.
The Price-to-Earnings ratio won’t help you if your stock has nosedived. Your notion of “cheap” isn’t the same as someone else’s with a much larger financial base.
Sit Still in a Quiet Room
I resisted for two years before beginning to invest and learn to keep myself under control. I still wish I’d read about that in a book first.
You don’t need comprehensive guides for selecting stocks. In fact, you shouldn’t select them at all. Go with index funds and do dollar-cost averaging.
What you need are books teaching you to keep your mental health and emotional stability when yet another war has broken out, and your portfolio has taken a plunge.
It’s not my imagination. Mr. Market has been volatile of late. This week, it skyrockets. Next week, it craters.
You see your net worth swing by $100,000+ weekly if you have a 7-figure portfolio. It’s exhilarating on one end and harrowing on the other.
What can you do to keep your nerves under control?
I don’t have an easy answer for dealing with the anxiety of losing money. But I use a simple technique to keep my sanity in the conflict-ridden world of 2023.
Your investment is ownership of part of the American economy. Someone else may decide it’s worth less today than yesterday. So be it. You still own the same chunk of the economy.
So stop obsessing over how much it’s worth.
I know it’s hard. You have investments and want them to grow.
They eventually will, although not at your command.
You make money when you stop focusing on money. The best investor can sit still in a quiet room. Forget you have investments at all.
I look at my portfolio once a month when I add to it. I do so strategically.
My portfolio is growing? Fantastic, I let the ride continue and add what I planned.
My investments are falling? I go broke trying to add more when everyone is panicking.
The best part is your future self doesn’t need the money now. Being a long-term investor, you focus on your life decades later.
What happens today won’t matter in thirty years.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.
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Ben, thank you for publishing this piece!
Yep. It takes some time to become able to disconnect to your money insecurity while investing in stocks! Good article!