From the day we are born, most of us are conditioned for perpetual action. We feel like we have to do things constantly. We have to go to school; take a job; earn a living; build a house; do charity; go to church and so on endlessly. However, if not in real life, but at least in investing, laziness is a lovable virtue.
How is inactivity a virtue in investing?
Let’s examine in some detail.
As in our daily life, we often tend to project our conditioned nature of constant action also in the investment. Whereas, wisdom dictates that once we have made an investment after careful evaluation, we leave it untouched for many years, sometimes even decades.
On the other hand, many innocent and uninformed investors constantly worry about their investments. This constant worry and monitoring of investments is a serious problem.
Whenever I think about this, I always remember the childhood story where a man planted a seed and watered it regularly. But instead of just letting the seed sprout at his own pace, he constantly worried. And finally, one day, unable to contain himself any longer, he dug up the spot only to discover to his dismay that the seed had sprouted and was about to sprout from the ground. And with his stupid act he ended the life of the plant that he loved so much. The temperament of the man in the story and the anxious investors are identical.
To further complicate matters, television channels broadcast market forecasts by so-called experts minute by minute, twenty-four hours a day. This makes investors even more nervous.
Online trading facilities available on laptops and mobile phones encourage nervous investors to do the irrational to sell Y purchase decisions, resulting in constant investment churning.
Unfortunately, such continual meddling in investments leads to poor investment results.
So what is the solution to this sorry state of affairs?
We need to improve investor awareness and education.
Investors must understand that market fluctuations are natural. Even extreme market swings are not to be feared, they are simply good opportunities for further investment. Investors should realize that good, well-researched investments will not only recover values lost in market corrections, but will even reach unprecedented heights when the market is at the opposite extreme.
Investors must learn to develop a good temperament. They should learn to beat the two worst enemies of investors, greed Y fear.
They need to learn to stand their ground during stock market storms.
Perhaps it is even advisable for investors to stop reading financial newspapers and watch financial television channels, at least the sections related to the markets.
If you look at the situation rationally, you don’t worry every minute about the market price of the house you’ve invested in all your life, or the business you own and run, do you? Investing in a stock of a wonderful company is no different than owning your home or business.
Hence I reaffirm that in reversing laziness is indeed a lovable virtue.