My new book, The Long Game, is available now. The book contains reflections from 30 investors who’ve survived decades of market cycles. You’ll learn how to tune out the noise that makes you second-guess yourself, handle the fear and greed that hurt your decisions, and stick to principles that actually compound wealth over time. Click here to get your copy.
Here’s something interesting I’ve noticed over the two decades of being an investor.
When markets are going up, everyone is a long-term investor. Very patient and philosophical. “I am here for the journey, not the destination.”
Then, the market goes sideways and does absolutely nothing. And slowly, the same people start drifting. They stop reading. They check their portfolio app and close it faster than a horror movie jump-scare. They start forwarding WhatsApp articles about why equity is overrated. Some of them move money to fixed deposits (FDs) and tell themselves it’s prudence.
What happened?
Nothing happened. That’s the point. Nothing happened, and that was enough to undo them.
I recently came across this quote from William Bernstein who wrote in his book The Investor’s Manifesto about an important ability investors need to be successful:
…they must possess an interest in the process. It is no different from carpentry, gardening, or parenting. If money management is not enjoyable, then a lousy job inevitably results, and, unfortunately, most people enjoy finance about as much as they do root canal work.
Note that Bernstein isn’t saying that most investors are stupid, or that they are undisciplined. What he said is simply that the thing itself—the actual work of investing—gives them no pleasure. And so when the reward stops coming, there’s nothing left to hold them there.
Think about that for a moment.
Why are you here? I mean, as an investor.
Because if you’re being honest, most of us didn’t come to this because we love understanding business models. We came because someone told us this is how wealth is built by doing nothing. Or because a colleague made a killing on an IPO or a microcap stock… and we suffered major FOMO. Or because inflation is quietly eating whatever is sitting in the savings account.
These are perfectly fine reasons to start. But they are not reasons that carry you through a few months or, worse, years of markets doing absolutely nothing.
The problem with flat markets is they don’t give you anything to push against. Even a crash has some drama to it. You feel fear, which wakes you up. You make a decision, one way or another. At least something is happening.
But two years of the market just sitting there doesn’t test your courage. It tests whether you actually find any of this interesting when there’s no scoreboard to look at.
And most people, if they’re honest, don’t.
Now I want to be careful here because I think this may get misunderstood.
I’m not saying you have to become some kind of obsessive person who reads annual reports for fun on Sunday mornings or family vacations. What I’m asking is something simpler.
Is there anything in the actual doing of this that you find fulfilling?
Do you find interest in looking at the way a business works? Why one company earns massive profits while another company, doing what looks like the exact same thing, struggles? How rationally smart people behave so irrationally with money? Why the market sometimes prices a good business like it’s worthless, and a bad one like it’s gold?
Does any of that make you curious?
If yes, then you’ll be fine. Sideways markets are just time to read, think, and understand the world better. The absence of returns doesn’t bother you that deeply because returns were never the only thing keeping you here.
But if the honest answer is no, and if the only thing that ever made this feel worthwhile was watching the number go up so that you have something to show for it, then no amount of process or discipline will really save you from yourself.
Discipline, after all, is a tricky thing. It only works when things are working.
Think of a gardener. He doesn’t abandon the garden because nothing bloomed this month. But he doesn’t stay through willpower either. He stays because there’s something in the digging, the watering, and the slow and mostly invisible work of it that he actually likes.
The investors I’ve seen stay sane through long, flat stretches are like that gardener. Somewhere along the way, the process itself became interesting to them, not just the returns at the end of it.
The market has broadly gone nowhere for two years. But that’s not what’s been tested.
What’s been tested is why you’re here at all.
And honestly, that’s worth knowing.
My new book, The Long Game, is available now. The book contains reflections from 30 investors who’ve survived decades of market cycles. You’ll learn how to tune out the noise that makes you second-guess yourself, handle the fear and greed that hurt your decisions, and stick to principles that actually compound wealth over time. Click here to get your copy.
Very nice article Vishal ! most of them don’t know how to anchor their investing to a system or process. They mindlessly trade or churn the portfolio which works during a bull market and when they loose or doesn’t make any money in the ensuing side ways or bear market, they get bored and exit the market. This is the same reason why direct investing doesn’t work for most of the people.