Wednesday, October 07, 2009

Successful Investing Is Boring

I fancy Jessica Hagy's Indexed blog. That's because Ms. Hagy can depict life 's paradoxes in simple but thought provoking art-like graphics.

This Normal is Boring is an example.

We can apply this to investing.



Simply substitute "Weird" with "Depression" and "Beautiful" with "Euphoria" then we come up with up with the theme: Successful investing is BORING!

Why?

Because successful investing should go against pulsating high risk momentum, sound bytes and popular opinion predicated on superficialities.


To quote on Warren Buffett (Tilsonfunds),

``I've seen nothing to improve on Graham and Fisher. Just think about stocks as a business and then evaluate that business. This requires insulating yourself from popular opinion." (emphasis added)

And to further quote John Maynard Keynes,

``Moreover, life is not long enough;- human nature desires quick results, there is a peculiar zest in making money quickly, and remoter gains are discounted by the average man at a very high rate. The game of professional investment is intolerably boring and over-exacting to anyone who is entirely exempt from the gambling instinct; whilst he who has it must pay to this propensity the appropriate toll." (bold emphasis mine)

In short, one should focus on minimizing risks and optimizing profits which require equanimity and the avoidance of gambling instincts, all of which would should make investing...quite a boring stuff.

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