I really like to stay positive with whatever I write here on Safal Niveshak.
As you must have noticed from my posts in the past, I write more on ‘how to make money from stocks’ than on ‘how to avoid losses’.
But whatever I think and write, I can’t deny that losses are an integral part of the stock market investing game. And chance is you might have come across them yourself.
After you suffer a loss on your stocks, while it is understandable (and healthy) do go into the grief and anger phase initially, staying there for a prolonged period of time won’t do any good.
Though in the moment of pain, we might not believe that there could be any good ingrained in that moment, we often realize later, that our greatest lessons came from those moments of loss, grief and pain.
It’s not just about ‘winning’
One of my biggest lessons in life came from the book called Every Second Counts by the famed cyclist Lance Armstrong.
The book is an amazing story of introspection, self-belief and discipline. Pain is not such a bad thing after all, argues Armstrong, and is, in fact, the most uplifting of all experiences.
Here is a passage from the book that says it all…
When you win, you don’t examine it very much, except to congratulate yourself. You can easily, and wrongly, assume it has something to do with your rare qualities as a person. But winning only measures how hard you have worked and how physically talented you are; it doesn’t particularly define you beyond those characteristics.
Losing, on the other hand, really does say something about who you are. Among the things it measures are: do you blame others, or do you own the loss? Do you analyze your failure, or just complain about bad luck?
These words have been like a guidepost for me when it comes to everything I do, including investing in stock market.
What these words tell me is that if I’m willing to examine failure, and to look not just at my outward performance, but also my internal workings, losing can be valuable.
How I behave in those moments can perhaps be more self-defining than winning could ever be.
As Armstrong writes, “Sometimes losing shows you for who you really are.”
Loss hurts, because it should
A loss (and the pain that comes with it) is nature’s way of telling us to get out of harm’s way. Like fever tells us that something’s not right inside of us and that we must take the necessary medication to avoid doing a greater harm to our body.
This is also true when it comes to investing in stock market. When the market moves and you’re losing money, you know it hurts.
But you can survive the onslaught of a future loss only when you know what you must learn from the latest loss, and vow never to make the same mistakes again.
You see, losing some money is an integral part of the investing journey. You cannot avoid it.
But what you can do is open yourself to this unfolding process – take your loss as an invaluable experience and move on.
There are numerous lessons you can learn from losing money in stock market.
Here are some lessons I’ve learned over the years:
- A loss taught me to be humble in my analysis of an investment’s real worth.
- A loss taught me that predicting the future is futile, and dangerous.
- A loss taught me to treat patience and hard work as virtues.
- A loss taught me that even if I win the rat race, I’m still a rat.
- A loss taught me that the greed to earn a quick buck will only bring me despair.
- A loss taught me that I’m solely responsible for my money and must not lay the blame on others.
In short, I count my stock market losses as great teachers who have transformed me as an investor (and I’ll treat my future losses the same way).
Here are the wonderful lyrics from a German band Emil Bulls song, ‘Lessons from Losses’…
I won’t stop until I hold all the aces
this time I’m gonna go for gold
I’ve learned my lessons from losses
the lamb in me became a lion
I gotta get rid of you
I won’t bury my head in the sand
Persistence will prevail
When the past is coming back to haunt me
I’m not the one to bow and scrape
I escape into the future
To expand my way
Don’t you ever dare
I’m gonna go for gold
As an investor, this is what your losses tell you – Learn your lessons…then go for gold!