Thursday, June 16, 2016

Be Thankful



I apologize that I haven’t posted on this blog for the past several months - I was studying for the CFA Level 3 exam, which I wrote earlier this month. It is a great feeling to be back into my regular routine again and have some spare time. So here is a simple post that I hope you can apply not only in your investing but life in general. Enjoy

Being grateful

I was talking recently with my friend Deep who I’ve known since about age 4. He told me how he just started wearing eyeglasses again. This seems like a minor lifestyle change until you learn the history of my friend’s eye condition.

When Deep was 5, he got his first pair of eyeglasses. But his vision kept deteriorating that he needed a stronger prescription lens every year. By age 11, he was on the strongest lens available. The optometrist told Deep that if his vision didn’t stabilize soon, he would be legally blind.

At that time (over 20 years ago), we did not have proven, mainstream eye surgery techniques like Lasik or PRK. Of the limited procedures that were available, there was no internet to do research, evaluate risks and learn from testimonials of other patients. Instead, Deep did the only thing he really could do. He prayed. Every day.

At age 12, Deep underwent a procedure called Radial Keratotomy. “Weren’t you scared?” I asked. “Of course, it’s your eyes after all. But I really didn’t have much of a choice. There wasn’t much to lose” he replied.

I can’t help but think how grateful Deep must be that the surgery was successful. How he went from barely being able to see to not needing glasses until recently (something the optometrist said was inevitable later in life). His life dramatically improved. Deep is currently a Senior IT Manager and one of the most passionate people I know about computer technology, motorcycles, and life in general.

There’s an important message here. Too often we’re constantly listing all the things we’re missing in life. “If only I had ____, life would be better.” This leads us to being unhappy and even depressed.

One of the simplest and most effective ways of increasing our happiness is to stop focusing on what’s missing and instead be thankful for the things we already have: A home. Modern medicine & good health. Wide selection of fresh food at your local grocery store that even the wealthiest didn’t have in past civilizations. It is a great feeling once you believe we are not owed anything in life and that everything we have is a bonus.

As applied to investing, it is easy to be unsatisfied with your portfolio size, returns or both. In addition, it is easy to get sucked in by the media and dwell on the constant barrage of negative news. These factors often lead us to make sub-optimal decisions with our portfolio, which in turn further add to our stress and misery.

Instead, focus on all the positives of being an investor:
  • It is easier now more than ever to follow the research of professional investors. I am especially grateful for having a simple & proven strategy and evolved philosophy thanks to the generosity of Gary Antonacci, Meb Faber, Tadas Viskanta, Ben Carlson, and many others
  • Be grateful that you have savings to invest (no matter how small). A large % of the population unfortunately does not have this benefit
  • Perhaps you have developed a sound investing plan at a young age. Be grateful for that, as many go their whole lives not having figured out their finances
  • ETFs have given us diversification at low cost. Online brokerages have made it cheap & easy to execute trades 

Evaluating thyself

Related to the problem of overly focusing on our negatives is the problem of comparing ourselves with those that are more successful than us.

Often, as investors it is tempting to compare our performance with other investors. Did I beat XYZ
manager? This is one of the worst things you can do. There will always be someone out there better than you. You can never always be the best, nor should you care to be.

Seth Godin has an excellent blog about general business & marketing philosophy. But so much of what he writes applies to investing. He recently wrote a post titled “It’s not a race.” Seth writes: 
A race is a competition in which the point is to win. You're not supposed to enjoy the ride, learn anything or make your community better. You're supposed to win. Once you see it that clearly, so many things are clearly not races. And when we treat life that way, we cheat our customers, the people we seek to serve, as well as ourselves.

Instead of trying to compete with other investors, I recommend you compare your present self with you one year ago. And I’m not talking about portfolio returns. I’m talking about:
  • Was I more disciplined this year?
  •  Did I have less stress?
  • Was I able to ignore the noise?
  •  How many people did I help with their finances?
  • What did I learn?

Please feel free to share you own thoughts in the comments below. Thanks for reading