We can draw many valuable lessons from the world of sportsmanship.
Athletes spend years going through sheer rigour to hone their skill, in order to make it to the top of their league. Some of these epitomes of success offer precious pearls of wisdom that we can apply in life.
My favourite quote comes from Hockey Hall of Famer, Wayne Gretzky. It states,
"You miss 100 percent of the shots you don't take."
This statement describes neatly the menace that stops investors from acting decisively - fear.
Often, when the price of a share has retraced to our target level, we refuse to pull the trigger because we fear that once we bought the stock, it will get cheaper and we look like a fool who paid more than the next person.
The market has an ominous name for this phenomenon. It is called, "catching a falling knife".
And it can get worse - When we miss the chance to buy and the share price bounces back up, the fear evolves into an uglier monster - regret.
While fear nibbles at our heart, regret takes a big bite.
At the moment of decision, it can feel like we are caught between a rock and a hard place. To buy, or not to buy? To click on the button, or wait?
Hesitation leads to paralysis, and before we know it, the chance slips us by.
Through years of investing, I have found two methods to deal with the malaise.
The first method is simple - take action. Shut out that inner voice. Feel the fear and do it anyway.
Frame it in another perspective:
You may lose ($$$) if you do (buy the stock), but I guarantee 100% you will not win ($$$) if you don't (buy the stock).
Pain is inevitable in life. Suffering is optional. There is a risk in everything. Even eating involves the risk of choking.
The best we can do as investors is to minimize the calculated risk taken, and maximise the probability of a win.
Which brings me to my second method of dealing with fear and regret - preparation.
I cannot emphasize enough - a good investor does his/her homework. He/She knows the right companies that fit his/her investment criteria. Any purchase is planned and not made on a whim.
A good investor should also have a clear idea of the limit price at which he/she is UNWILLING TO PAY for a stock.
When you are aware of the price boundary marking the forbidden zone, the rest of the region is opportunity land.
Both methods work in conjunction with each other. Unless we have good knowledge of the companies we want to invest in, and take action when the opportunity strikes, we will never be able to achieve our intended goal. Financial freedom will always remain an elusive dream.
Given a choice, I will take reality, warts and all anytime.
Athletes spend years going through sheer rigour to hone their skill, in order to make it to the top of their league. Some of these epitomes of success offer precious pearls of wisdom that we can apply in life.
My favourite quote comes from Hockey Hall of Famer, Wayne Gretzky. It states,
"You miss 100 percent of the shots you don't take."
This statement describes neatly the menace that stops investors from acting decisively - fear.
Often, when the price of a share has retraced to our target level, we refuse to pull the trigger because we fear that once we bought the stock, it will get cheaper and we look like a fool who paid more than the next person.
The market has an ominous name for this phenomenon. It is called, "catching a falling knife".
And it can get worse - When we miss the chance to buy and the share price bounces back up, the fear evolves into an uglier monster - regret.
While fear nibbles at our heart, regret takes a big bite.
At the moment of decision, it can feel like we are caught between a rock and a hard place. To buy, or not to buy? To click on the button, or wait?
Hesitation leads to paralysis, and before we know it, the chance slips us by.
Through years of investing, I have found two methods to deal with the malaise.
The first method is simple - take action. Shut out that inner voice. Feel the fear and do it anyway.
Frame it in another perspective:
You may lose ($$$) if you do (buy the stock), but I guarantee 100% you will not win ($$$) if you don't (buy the stock).
Pain is inevitable in life. Suffering is optional. There is a risk in everything. Even eating involves the risk of choking.
The best we can do as investors is to minimize the calculated risk taken, and maximise the probability of a win.
Which brings me to my second method of dealing with fear and regret - preparation.
I cannot emphasize enough - a good investor does his/her homework. He/She knows the right companies that fit his/her investment criteria. Any purchase is planned and not made on a whim.
A good investor should also have a clear idea of the limit price at which he/she is UNWILLING TO PAY for a stock.
When you are aware of the price boundary marking the forbidden zone, the rest of the region is opportunity land.
Both methods work in conjunction with each other. Unless we have good knowledge of the companies we want to invest in, and take action when the opportunity strikes, we will never be able to achieve our intended goal. Financial freedom will always remain an elusive dream.
Given a choice, I will take reality, warts and all anytime.
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