I come to realise successful investing boils down to having guts and humility.
Having the guts to buy when the market is down.
It doesn’t matter how much research you have done if you do not have the guts to press the buy button at the end of the day. You can be right and make no money from it.
And the future conversation is full of regrets – I should have, I could have, if only I bought the stock…
It is also about having the guts to hold onto your positions even though they are losing money.
It doesn’t matter how much you believe about the future potential of a stock if you do not have the guts to brace through the volatility. You don’t enjoy the long term returns if you cannot hold long term.
And the future conversation is full of regrets – I bought it before but sold it… I knew it would do well… If only I held on to it…
But pure guts is dangerous. If guts is yang, humility is yin. You need humility to know when you are wrong. No investor is going to make 100% right investments and we need to sell our mistakes once we recognise them.
It is easier said than done because how do you recognise a mistake? It cannot be simply about having a stock that is losing money.
It depends on how honest you are with yourself because our ego often forbids us from looking at our mistakes objectively – does the investment thesis still hold? Is the company performing according to what you envisage or you are simply hoping for a good outcome?
Humility also means curtailing back excess confidence – the go big or go home behaviour. Leveraging to the hilt with no regards to risk. Or simply thinking that nothing will go wrong with your investments.
Too much humility is bad because you would lack confidence to act. Always unsure about yourself. Always in doubt.
Some may have too much guts while others may have too much humility. We all need both to achieve the yin yang balance – act with courage when we need to and retreat in other times.