Overcoming Ourselves - Fighting The Urge And Investing For The Longterm

  Fighting back urges is difficult at times.

I mean, that guy that tries to muscle his way through the line, and shoves you and your girl needs to hear a piece of your mind, right?

Or what about the urge to let BJ Upton know how you feel about him after he strikes out (which is often) with runners on? The only problem is that little kids are around, and we don’t want to tarnish their future, but the urge still arises.

These aren’t uncommon, and at times we resist the urge but at others we don’t.

When we don’t hold back on muscle man we most likely end up with a black eye. Then when we don’t hold back on BJ, we may get a stern look from the little kid’s parents.

Either way, we remember the decisions that we made, the outcome and how we felt.

We usually feel better (longer term) when we resist the urges we know aren’t good for us in the long run. I understand the mentality of “well, they deserved it, and it felt good to get it off my chest,” but isn’t it better to be a lover than a hater, calm rather than violent and cool rather than creepy?

Investments are no different than the muscle man; they will push you around, and if we can resist the urge to push them back, we can be on our way to reaching our million dollar goal. When we don’t, we very well might get multiple black eyes that will keep us from reaching our goals.

Our past has been rough…. Don’t let the future be the same too

If you are in your 20s or 30s, the investment environment hasn’t been too kind to us.

We have had the great fortune to see the technology sector collapse in 2000 (right as some of us began having the desire to invest). We experienced the sadness of 9/11. Then we experienced the worst economic recession since the Great Depression… which was something that we believed only old people dealt with.

Either way, these experiences haven’t given us much comfort to invest in the markets. We’ve seen Mark Zuckerberg develop Facebook and make billions. We’ve seen App companies sold for billions of dollars, and so we now believe we can make that quick billion… HA!

Recent events tend to drive our decision making process, so the terrible experiences have pushed our generation away from traditional investing.

However, traditional investing is still the one place that we could put $100 and (historically speaking) get $1,000 back in 10 years.

I don’t think that it only cost $100 for Zuckerberg to get his billions, rather it cost a pretty penny.

Traditional investing lets those other guys spend all the money developing the company while we can reap the rewards afterwards, with less of a contribution.

Moral of the story, resist the urge of a quick buck.

Focus on the pie, not the pieces

Say you put $5 into two different investments, and one investment sees a $1 gain while the other investment sees a $1 loss. Rating your feelings (1 being extremely pissed and 10 being extremely happy), how would you rate each investment?

Studies would show that people would likely rate their feelings towards the losing investment as a 1, while rating their feeling towards the investment with gains at a 5.

We tend to be much more upset with our losers (actually studies show two times as much) than we are happy with our gainers.

What this does is lead us to some of those undesirable investment urges. We let the emotions of the loss drive our investment decision making. This causes us to sell at the complete wrong times, and then try to recover our past losses at the exact wrong time.

Resist the urge of focusing on individual investment returns.

Prepare for a storm and weather it in silence

When it snows, in Atlanta at least, we stock up our pantries well in advance. If you go to the store the day the storm is set to come, the shelves are empty.

When we wait until the last minute we are stuck with what we have at the house and relying on neighbors. However, we typically do not overreact, and try sell all our valuables just to get food for this short time period.

We do this because, ultimately, the storm passes, and the shelves go back to being full so we can go replenish our empty pantries.

The markets have always been able to weather the storms. They recovered from the Great Depression; they have made it through multiple wars and, they have found a way to advance during the worst and best of presidents.

After the markets saw their shelves cleaned and money lost, they became replenished… because ultimately the day the markets collapse for good is the day we have bigger things to worry about.

So, build your portfolio for longer term goals, and if you don’t put all your eggs in one basket, you will be able to weather those snowstorms that come along the way.

Resist the urge to react over short term events.

Oh, remember we are just average

Trying to outsmart the market will not work.

I often hear of people telling me that they timed this situation perfectly and nailed that last market fall. They don’t tend to tell me about the times they didn’t time it right or outsmart the market.

Investing is supposed to be a boring thing. Gambling is exciting. When you begin your investment career, you have to make the decision whether or not you want to invest for your future goals or gamble for them.

If you decide gambling is for you, then best of luck. As they say in Vegas, the house always wins, and that’s how it will be within the markets.

Resist the urge to try and outsmart the markets.

I’ll leave you all with words from the best investor of all time, Warren Buffett: “Success in investing doesn’t correlate with I.Q. once you’re above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”

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