“If all you care about is the mountaintop, the climb is going to be rough.” ~ Anon
“We enjoy the process far more than the proceeds.” ~ Warren Buffett
This is going to be one of the shortest posts I’ve written. One book that I keep by my bedside for frequent reading is Ruskin Bond’s A Book of Simple Living. Here is a passage that I stumbled upon from this book last night, and which resonated perfectly well with how I practice investing and one key idea I try to teach here – the focus on process vs outcome, on the journey vs destination.
Bond writes –
I learned early – without quite realizing it – that the pleasure of travel is in the journey and not so much in reaching one’s destination. Destinations rarely live up to the traveller’s expectations. And the pleasure is further reduced if you’re checking your watch all the time.
In travel, as in life, give yourself plenty of time, so that you won’t have to rush – you miss seeing the world around you when you are in a great rush, or if you seal yourself off in air-conditioned cars and trains, afraid of the heat and dust.
The adventure is not in arriving, it’s in the on-the-way experience. It is not in the expected; it’s in the surprise. You are not choosing what you shall see in the world, but giving the world an even chance to see you.
Let’s break up the ideas here and see how they relate to your investment and wealth-creation journey –
- Pleasure of travel is in the journey and not so much in reaching one’s destination – You will never know how much money is enough, or how much you will need (destination) to be happy and your financial life to be fulfilling. So, there’s no point fretting about it. Rather, focus on building the right process (journey) that you’ll work on the way. With respect to the investment process, Michael Mauboussin writes in The Success Equation – …in activities where luck plays a strong role, the focus must be on process. Where skill dominates, performance is a dependable barometer of progress. But where luck is a stronger force, the link between process and outcome is broken. A good process can lead to a bad outcome some percentage of the time, and a bad process can lead to a good outcome. Since a good process offers the highest probability of a good outcome over time, the emphasis has to be on process.
- Destinations rarely live up to the traveller’s expectations – By the time you are close to your goal of making your first ten-bagger, it won’t seem like the ambitious goal it once was. It will seem like a boring inevitability of the right process.
- Pleasure is further reduced if you’re checking your watch all the time – Stop checking your returns all the time. You anyways don’t control that.
- In travel, as in life, give yourself plenty of time, so that you won’t have to rush – Without doubt, time is the most important element in the compounding formula. If all you have is 7 years to grow your money 10x, you would need a 40% annual return to achieve that. If you have 9 years, you’d still need a 30% annual return. But if you have 17 years, just a 15% rate would be enough. In short, if you really have a 20-year horizon by when you need to meet your major financial goals, why hurry? And why take undue risks in pursuit of unreasonable returns?
- The adventure is not in arriving, it’s in the on-the-way experience – Stop worrying about future market crashes and stop getting surprised when these actually happen. Because they will. That’s the nature of the market. Simply enjoy the experience and be grateful for it.
You see, the most important journeys in life and investing come without a map. If you can still find pleasure in them, you’ll learn to adapt, survive, and grow. What else are you seeking anyways?