Successful investing is about discipline – not intelligence, nor access to specialized investments.
Yet, even as you read this first sentence, you likely don’ t want to believe it. After all, we want it to be about a special investment idea you just discovered in Forbes that nobody else who reads Forbes discovered.
You want investing to be about an elaborate system, a new idea and achieving“ alpha” while neutralizing“ beta.” You want this to be true, because the moment someone suggests successful investing is about consistently saving money into a boring investment program while remaining emotionally detached, the onus falls on you – and nobody else. A dietitian can prescribe regimented diet and exercise, but it’ s of no use if you fall back into your normal routine of craft beer and Seinfeld reruns.
Control What You Can Control
Emotion is the enemy of investing, and it provokes behavioral biases. Classical economic theory is based on rational people making rational decisions. But we don’ t. How else can you explain DALBAR’ s annual
Quantitative Analysis of Investor Behavior study, which suggests that investors have captured approximately 20 percent of the available return available to them in any time period measured?
Investing shouldn’ t be exciting or frightening. My recommendation: turn off CNBC and check your emotions at the door.
Beyond moderating our feelings, we have three available levers we can exercise in our investing program.
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