Whether investors like it or not, investing may be considered as a “lifestyle” job and may not get recognition for the hard work that goes into it. As an investor, don’t underestimate the investing process, the work involved, and above all your self-worth!
If you were to go by general media, investing may come across as one of the easiest jobs on the earth. Popular culture doesn’t necessarily associate investing activities with skill or hard work. Moreover, the association with money may even lead some to think that investing is bad or greedy. Depending on personal situations, some tend not to have positive associations when it comes to investing.
Before we look at society’s take on investing, what is your personal take on investing? Is it positive or negative? It is great if you have a favorable opinion on investing. Congrats! If you don’t have a favorable opinion of investing, there is some work to do. Because that is a big hurdle we need to overcome. Hope this article helps serves as an encouragement to many. We will address head-on the stereotypical take on investing and help wannabe investors overcome any negative thinking.
How does the world see investors?
For the most part, the world (i.e. primarily your family and friends) may see investing as an activity to multiply money i.e. becoming rich. The focus is on the results, becoming rich, then the process itself. The world may look up to rich people as aspirational, but still, the investors don’t get much love.
If you’re an investor, should you worry about what the world thinks of investing? Not really. The real question is do you enjoy the investing process or work? Do you find it challenging? Like becoming a pro athlete, becoming a good investor is no small thing. Only the good ones succeed in the long run.
If you listen to a leader in any field, one of the biggest aspects of success is working hard and long. The common lore is also that hard work and persistence lead to great success. It is tough not to agree, but what exactly is hard work in today’s age? In the decades past, a farmer who works in the field 10+ hours a day would be hard work. A factory worker working 10+ hours a day would be hard work.
Historically, humans have been laborers or workers working in the field or factory for the entire day. Physical work was associated with hard work and is associated to this day. The physically demanding work is clearly attributed to hard work. But, what is hard work in today’s non-agricultural economy? Let us go through a few examples:
- A Singer who creates music and works on it for 10+ hours a day in her studio. Is that hard work?
- A Writer who writes a book working on it 10+ hours a day sitting at his computer. Is that hard work?
- A Doctor seeing patients in his office for 10+ hours a day. Is that hard work?
If you believe any of the above is hard work, then without doubt investing is also hard work. Investing involves a lot of learning, analysis, research, due diligence, writing and decision making. If you consider any of the above as hard work, investing also demands equal attention and work. It makes it all the more better if you actually enjoy it.
Entrepreneurs, Workers and Investors
We love entrepreneurial stories and successes. We love to hear success stories and everyone aspires to be rich. Let us take a tech entrepreneur. For the most part, the founder is going to develop on his own or with a team. Society traditionally attributes hard work with workers, creators, or producers. You produced grains, software, music, etc. Along those lines, investors don’t produce but invest in producers. And hence it becomes a comparison of the hard work of an entrepreneur vs. worker vs. an investor.
For an investor, where is the hard work? The hard work is in keeping up to date on the markets, trends, finding deals, researching deals, doing due diligence, and talking to various stakeholders (legal, etc.) throughout the process. If you look at 20 real estate deals, you may be lucky if you proceed with one. Many hours need to be spent on research and following trends for one investing idea. You will have nothing to show for, say, 9 of 10 investing ideas. Even the one that you have invested in may not work out as planned.
Even long-term investors (similar to writers etc.) sometimes may feel that they have wasted time pursuing all those opportunities. Many times our thesis may prove wrong and in those cases, it is a double whammy. You’ve lost both time and capital. That is a hard feeling.
Investing as a habit and mindset
Investors cannot change what others think of active or passive investors. Not everyone is going to become Warren Buffet. We don’t think anyone should care what others think of their profession or them. Be true to yourself, you know the hard work that you put in to get that one out of ten deals that returns 2x. Don’t be hard on yourself, especially during trying times.
Here’s the habit of Warren Buffett, one of the prolific investors. Here’s his habit even after he’s worth $80B or more. Luck plays a role, but can anyone argue against his habits and investing methods that made him the investor he is today?
Once he’s in the office, he hits the books. CNBC reported that Buffett estimates he spends 80 percent of his day reading. He recommends that people try to read at least 500 pages a day.
Source: https://www.afr.com/work-and-careers/management/inside-warren-buffetts-daily-work-routine-from-645am-to-1045pm-20170906-gybn7t
In addition to forming an investing habit, our mindset plays a critical role. If our mind is not into the job at hand, then it is hard for us to become an expert. We may have some doubts initially, but even after some time if we don’t get over our negative associations with investing, it is hard to excel in that field. It is hard to reach the destination when we are swimming against the tide (our mind).
Talking about mindset, it is important to talk about an investor’s emotions and how an investor needs to be objective. An investor is simply put, a capital allocator i.e. you put money behind businesses or activities that give the most return on the capital. But, investing is also behavioral i.e. you’ve to fight your own emotions when investing. Emotions make you thrive in a sport or art. It is actually the opposite in investing. Don’t get attached to your investments. You can be passionate about investing, but you cannot be passionate about your investments.
Takeaways
Hope this article provides encouragement to many on the journey as investors. It is a journey, it is not “easy” work and people have to develop good investing habits. In addition to developing good investing habits, investors also need to check in their emotions and make behavioral changes. As investors face the quandary of not becoming attached to their investments. If it doesn’t make business sense, be ready to part with an investment at a loss or sell when the entire market is extremely bullish. If you’ve aspirations to become a good investor, start immediately and spend some time every day learning, investing, and building good habits!