From the day we are born, most of us are conditioned for perpetual action. We feel that we have to do things constantly. We have to go to school; take-up a job; earn a livelihood; build a house; do charity; go to church and so on endlessly. However if not in real life, but at least in investing, laziness is an adorable virtue.
How is inactivity a virtue in investing?
Let us examine in some detail.
As in our daily lives often we tend to project our conditioned nature of constant action into the investing also. Whereas, wisdom demands that once we have made an investment after careful evaluation, we leave it undisturbed for many years – sometimes even for decades.
On the other hand, many innocent and uninformed investors constantly fret about their investments. This constant worry and tracking the investments is a serious problem.
Whenever I think about this I always remember the childhood story where a man had planted a seed and watered it regularly. But instead of simply let the seed to sprout at its own pace, he constantly worried. And finally one day unable to restrain himself anymore, he dug up the spot only to find to his dismay that the seed had indeed germinated and was just about to break out of the ground. And he had with his foolish act snuffed out the life of the plant for which he cared so much. The temperament of the man in the story and the anxious investors are identical.
To complicate matters further, television channels broadcast market predictions by the so-called experts minute-by-minute, twenty-four hours of the day. This makes the investors all the more nervous.
Online trading facilities available on laptops and mobile phones encourage the nervous investors to make the irrational sell and buy decisions, resulting in the constant churning of the investments.
Unfortunately, such a continuous meddling with investments leads to poor investment results.
So what is the solution to this sorry state of affairs?
We need to enhance investor awareness and education.
Investors need to understand that market fluctuations are natural. That even extreme market swings need not be feared, but are simply good opportunities for further investments. Investors need to realise that good and well-researched investments will not only regain values lost in market corrections but even climb to unprecedented heights when the market is at the opposite extreme.
Investors should learn to develop good temperament. They should learn to overcome the two worst enemies of investors, greed and fear.
They need to learn to sit tight through the stock market storms.
Perhaps it is even advisable that investors stop reading financial newspapers and watch financial television channels – at least the sections relating to the markets.
If you look at the situation rationally, you do not worry every minute over the market price of the house you had invested in for the lifetime, or about the business you own and run, do you? Investment in a share of a wonderful company is no different from owning your house or your business.
Hence I reassert that in investing laziness is indeed an adorable virtue.