The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life
As part of my exercise regimen, I have been climbing stairs to my 5th floor apartment 2-3 times every day for the past few months. And most of these are not slow climbs, but sort of high intensity, that leave me with a heart rate of almost 140-150 beats per minute.
Of late, I started keeping track of the time it took me to climb this much at one go. On an average, it took me 30 seconds to run up five floors, two steps at a time. Sometimes a second more, sometimes a second less. But on an average, almost 30 seconds later, I was huffing and puffing for the next 30 seconds as I reached my apartment.
After a few days of doing this, and imagining the exhaustion I ended up with, I started resisting this climb. The post-climb weariness had started taking a mental toll on me, enough to lead me to think twice before starting the climb again.
This happened till the day I decided to take it easier, and slower. So, I still decided to run up five floors, take two steps at a time, but at a relaxed pace, and aiming to keep my heart rate at around 120-130 beats per minute at the end of it.
I remember that first slow climb as relaxed, and I was not feeling exhausted at the end of it. I even greeted two neighbours on the way.
And when I reached the fifth floor, I looked at my stopwatch. It read – 35 seconds.
I thought the stopwatch was also exhausted like me and was giving a false reading. And so, I repeated the relaxed run up the next day. Again, the watch read – 35 seconds.
The third day, it read – 36 seconds.
I was taken aback by these readings. So, all my huffing and puffing was for those 5-6 seconds of lesser time? Of course, on a relative basis, the speedier run was saving me 16-17% in total time, but in absolute terms, it was just a 5-second gap, and minus the exhaustion at the end of it, and plus the exchanged smiles with my neighbours.
When I thought about it, I instantly remembered Prof. Sanjay Bakshi’s old post about return per unit of stress.
In investing, we only focus on the numerator, that is, the return we can earn from an investment. We rarely focus on the denominator, that is, the stress we take to earn that return.
So, when you focus on the numerator which is anyways not in your control, you can be like me rushing up five floors, all exhausted and stressed, and just to save that extra bit of time, when you indulge in any of these –
- Investing in highly leveraged companies
- Borrowing to buy stocks
- High frequency trading and day trading
- Investing in business exposed to negative black swans
- Dealing in derivatives
- Trading on inside Information
Or, you can focus on the denominator which is more in your control, and run up at a relaxed pace, not stressed or exhausted at the end of it, though taking a slightly longer time, when you indulge in any of these –
- Investing in zero or low debt companies
- Never borrowing to buy stocks
- Long term investing
- Investing in high quality, stable businesses
- Investing with clean, honest managers
- Staying away from derivatives
Doing the former in investing may lead you to an extra bit of return, but with a lot of stress, which may anyways shorten your life and time horizon to compound.
Doing the latter in investing may lead you to a little lower yet still decent return, but with almost no stress, which may help you live longer and so have a longer time to compound.
Here are a couple of numbers to help. Compounding at 20% for 20 years (more return, but more stress, and so short life) will turn ₹1 to ₹38. Compounding at 15% for 30 years (lower return, but lower stress, and so longer life) will turn ₹1 to ₹66.
Now, when you die (and I wish you a long and happy life ahead), you will neither take ₹38 or ₹66 with you. But higher wealth can always be useful for a greater number of people and causes. And not to forget the extra time you will have with your loved ones, just because you decided to take it slow and avoid the stress that comes with rushing through life and in investing.
So, my advice to you if you are still reading this, is – Slow down a bit, my friend, in life and investing, and even climbing stairs. You will take a longer time, but then slowing down will leave you with lesser stress and exhaustion, and with a longer time.
And anyways, as Mahatma Gandhi said, “There is more to life than increasing its speed.”
So, why even do it?
Slow down, and think about it.
That’s about it from me for today.
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