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Making money in stocks when everyone around you is making money isn’t really an achievement. All boats rise when the tide is high. The real test is what you do when the tide goes out. And more specifically, how you do it and with what degree of inner stillness.
Now, whatever philosophers and teachers may teach, most of us aren’t built for equanimity. We feel the ecstasy when things are going up, and we feel the misery when they’re going down. That’s just human.
But while you can’t fully eliminate the emotions, what you can do is remove the ‘landmines’ that turn temporary pain into permanent loss. Some of these include trading too much, trying to time the market, paying high investment fees without noticing, staying undiversified, and using leverage. These are the real killers. Not the volatility, but your response to the volatility.
Markets have always recovered after periods of corrections, and crises, and crashes, and panics. It’s simply because businesses keep finding ways to survive and grow, and humans keep needing things. What doesn’t automatically recover is the wealth you destroy in the panic of a correction, or the overconfidence of a boom.
Given what’s happened in markets over the past few weeks, I thought it was a good time to re-share what I’d call the iron rules of the investing Buddha, or the awakened one. Someone who has seen enough cycles to know that this too shall pass, and who has built enough inner steadiness to actually let it pass without doing something irreversible in the meantime.
The market never does anything to you. It simply reveals something that is already there. It could be your fears, your impatience, or your hopes that someone somewhere knows what comes next.
Can you look at that honestly, without trying to immediately escape it? That looking itself is perhaps the most important thing you can ever do as an investor.
It is what the long game is about.
If you enjoyed this piece, you may also like The Long Game, a book I recently published featuring lessons from 30 investing practitioners on patience, survival, and building wealth over time. You can find it here.
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