It’s human nature to want to get a job done as quickly as possible. Like you cross the street between intersections instead of using the zebra crossing, or jump a fence instead of using the gate.
It isn’t your problem!
Many of us have grown up being told that it’s important to accomplish as much as we can. But what we often aren’t told is that rushing can result in accidents, errors, and more time spent in the long run.
It is not wrong but it is dangerous
This is what Mr. Miyagi, the karate teacher in the movie Karate Kid, teaches his apprentice how when we choose the shorter way it always leads to danger.
In investing as well, we are perennially looking for shortcuts…
- Can you recommend me a outperforming stock please?
- Can you recommend me a market-beating mutual fund please?
- How can I invest without reading annual reports?
- So many investors don’t read annual reports, so why should I?
The truth is that there aren’t many actual shortcuts…in life and in investing.
There are direct paths, but no shortcuts.
But the irony is that most investors would put their lives in danger but not take the direct paths…
- Learn to read annual reports
- Remain within their circle of competence
- Learn to pick the right stocks and mutual funds
This is simply because direct paths often frighten us.
Interestingly, and especially when it comes to money, we are ready to work hard – take the longer route – to earn it…but don’t want to work hard – and take the shortcut – to keep it.
The story of the Tortoise and Hare is a constant reminder that reaching our financial goals takes a great determination, discipline, and practice. It also means ignoring the “hares” who brag about high returns with minimal risk.
Winning today (vs. winning tomorrow)
Look at your portfolio. You may have many stocks sitting on losses – stocks that you bought on someone else’s advice (shortcuts) and those that you bought on your own advice (direct paths).
It’s frustrating to look at them, isn’t it?
Well, one choice you have is to spend today frustrated that you are not winning with the stocks that sit in your portfolio – a choice that may lead you to seek ready-made advice (shortcut).
The other choice is to focus on what you need to do today to win tomorrow – a choice that will lead you to work harder to do your own research, think independently, and then invest (direct but longer path).
Your financial future would be defined by the choices you are making today.
Shortcuts – trying to reach there fast – won’t pay off in the long run.
Face the right direction, and keep walking.