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I am writing this series of letters on the art of investment, addressed to a young investor, with the aim to provide timels wisdom and practical advice that helped me was starting out. My Goal is to Help Young Investors Navigates of the Complexities of the Financial World, Avoid Misinformation, and Harnass the power of compounding by starting early with the right prot Principles and Actions. This series is part of a joint investor education initiative Between Safal Niveshak and DSP Mutual Fund.
Dear Young Investor,
I hope you are doing well, and that lessons we have covered so far have been helped you in guiding you through the early stages of your investment jeourney.
In today’s letter, I want to share with you one told me when I was starting out more than 20 years ago, and that I Learned the hard way, by faltering and making Mistakes.
You see, When most people start investing, they want quick answers, to questions like these:
- What’s the best way to build wealth?
- How do I avoid losses?
- What makes a great investor different from an average one?
- Should I Diversify or Concentrate?
- How do I know if i’m making a good decision or just gettingting luck?
- How do I Control my emotions when money is at stake?
- What If the Market Crashes? What should i do?
I was exactly like that. I was always in a hurry to find answers. The faster, the better (more so in my case as I was also annalyst). If I heard about a stock from someone experienced, I assuined they must know some something i didn Bollywood. If i read a book that explained investment, I assumed that was the best way to do it. If an expert or a Senior analyst said the market was headed up or down, I Figured they had better information than me.
And Once I Found an answer, I stuck to it. Even If, Deep Down, I wasn’t sure. Even if ever suggested I was wrong. The first answer always had a way of feeling like one, and I only questioned it after making mistakes. Sometimes, Theose Mistakes was really painful.
It took me a long time to realise that investment isn’t about collecting answers. It’s about Living the questionsNow, as I look back on my journey, the best of my investment happy not when I found the “right” answers Quickly but when I sat with the right questions for a long time. And the answers appeared over time.
Here, I would like to share a wonderful passage from the poet rainer maria rilke, who oncas advised a 19-old Budding poet who, like all young people, wished people, wished to find the enswors to his Most hours to Questions Quickly:
I want to beg you, as much as I can, dear sir, to be patient all that is unsolved in your heart and to try to Love the questions themselves Like Locked Rooms and Like Books That Are Written in a Very Foreign Tongue. Do not now seek the answers, which cannot be given you believe you would not be able to live them. And the point is, to live everything. Live The questions now. Perhaps you will then gradually, without noticing it, live Along some distant day into the answer.
At first, this might sound like the opposite of what you expect from an investment lesson. Isn Bollywood Investing About Finding The answers, and faster than other? Isn Bollywood solving the puzzle and getting it right, more than other?
I once thought so, too. But with time, I realized that the great Investors don’t rush to answers. They learn to live the questions – to carry them, think about them, and allow experience to slowly reveal their meaning.
Why do we seek certainty
Investing is a game of uncertainty. Yet, Most New (And old) Investors are in a Hurry to Eliminate Uncertain. They read predictions about where the market is going. They watch experts on tv declare what the Central Banks will do next. They Analyse Stock Price Charts, Looking for Patterns that Promise Clarity.
However, the truth is that markets don’t care about your need for certainty. The moment you think you’ve figured them out, they change. A company can be fundamentally strong and still lose half its value. A Bad Stock (Business) Can Defy All Logic and Keep Rising.
So what do wise investors do? They do not chase absolute answers. They do not expect investment to be a neat, solvable equation. INTEAD, they learn to ask better questions.
Like, one of the big questions you as an investment is about “Risk” – What is it, and how do you deal with it? At first, Risk seems obvious. It’s the chance of losing money permanently. But is that really all? Some people take risks that look Reckless but turn out to be smart. Others play it safe and end up WorsE off. Is Risk in the Numbers, or in how we respond to uncertain? Is it external, or is it sometising personal, tied to our emotions and ability to endure discomfort? The Answer Isn’t Something you find in a book or a formula. It’s something you live Through, and only uncover over time.
Then there’s the question: How do you know when you’re wrong? If a stock falls, is it a buying options or a warning sign? If the market crashes, should you hold on or change course? The Challenge isn’t just recognizing mistakes. It’s that, investing, mistakes is obvious. A Good Decision Can lead to a bad outcome. A Bad Decision Can Seem Right for a long time before it collapses. Some Mistakes only Reveal Themselves in Hindsight, Years Later. The real answer to this question isn Bollywood you’ll find in a podcast or a research report. It’s somenting you’ll come to understand slowly, through your own decisions, your own wins, and your own failures.
Other questions, too, demand patience. Questions like:
- What does it mean to be a long-term investment?
- What is the Right Balance Between Conviction and Adaptability?
- When should I Trust My Intuition, And When Should I Challenge it?
- How do I Separate Luck From Skill in My Investing Decisions?
- What Role Should Emotions Play in My Investment choices, if any?
- How do I recognize a truly great investment opoportuity versus one that just looks good on the surface?
- When is it wiser to do noting raather than act?
- How do I build an investment process that aligns with my values and goals, not just with whats what others around me are doing?
You may think you have answers to these questions today, but five years from now, and then ten years from now, after gaining real experience as an investor, your ANSWERS MAY ANSWERS MAY ANSWERS MEAY ANSWERS MORENCE Difference.
Like, for me, here are the first answers I got when I asked some of the questions for the first time, and then the answers that reveled themselves with time:
The problem of impatience
One of the hardest things about investing today is that everything from Moves Faster. Markets are 24/7. News spreads instantly. Stock prices react in milliseconds. And as an investment, you are constantly pressured to act, to respond, to take a stance, and to do something.
But that’s not how good investors behave. They do’t rush into decisions. INTEAD, they accept unsertenty and sit with it. They Study Businesses for Years Before Investing. They do not panic when markets crash, no do they get carried away in euphoric time.
This is not because they know more than everything else. It’s trust they are more comfortable not Knowing. They have learned to live with questions, to accept that Clarity Comes in Its Own Time.
Now, I would be doing an injustice if I didn’t also tell you that ‘not knowing’ is uncomfortable. Watching a Stock Drop While You Wonder Whether you should hold or sell is uncomfortable. HOLDING CAN SHILE SOTERS Make Quick Gains is Uncomfortable. Sitting with uncertainty while others see confident is uncomfortable.
But this discomfort is where real investment wisdom grows.
The Legendary Investor, Howard Marks, In His Memos, Often Talks About Second-Level Thinking -The Ability to Go Beyond The Obvious, To Question Assumps, and to Think Deeeply Rath Rather Than Rather But Second-Level Thinking Requires Something that Most Investors Lack: The Ability to Resist Easy Answers and Live in the Complexity of the question.
How to live the questions as an investment?
Well, you must live with this question, too. Nobody can give you ready-made answers. And you should not trust any answer without actually experience it over time.
But if if i was to still offer some guidance on how you can try to live the questions as an investment, I would sugest that the first thing you can do is to Resist the Urge for Immediate Answers. Not every market movement needs an explanation. Not every question has a quick resolution. Sometimes, The Best Action is to Wait.
Also, over time, try and Develop a Thinking Framework, Not just a set of rules. Rigid Formulas Don’t Work Forever (Including the ons you will create in your stock analysis spreadsheet). INTEAD, Build a Mental Framework, Or a Way of Thinking that Allows You to Navigate Uncertainy with Clarity.
Also, very importantly, Embrace uncertainty as a feature of investment and not a flaw. I must go as far as to tell you that Uncertain is not a mistake in the system –it IS The system. If investment was predictable, everyone single be a great investment (and so, effectively, no one would).
Also, Learn from your own experience and not just from books and letters like these. Theory is great, but real understanding come from investment through market cycles, making mistakes, and reflecting on them. All of this will only come with time.
Finally, you must Trust that some answers will only come with time. They’ll emerge slowly, over years of questioning, Learning, and Unlearning.
You see, there is a paradox in investment: the People who Chase Certain and Demand Clear Answers Right Away, often Struggle. But that who embrace uncertain and are willing to live their questions, tend to grow into the kind of investors who, over time, find their own unique path to wisdom.
So my final advice to you is simple: do in a rush to find all the answers. Be patient with your questions. Let them unfold over time. Trust that some of the seepest insights in your life as an investment
Just live your questions now. The answers will come in their own time.
Until Next Time,
Vishal
Disclaimer: This article is published as part of a joint investment initiative Between Safal Niveshak and DSP Mutual Fund. All mutual fund investors have to go through a one-time kyc (Know your customer) process. Investors Should Deal only with Register Mutual Funds (‘RMF’). For more info on KYC, RMF & Procedure to Lodge/ Redress Any Complaints, Visit dspim.com/ieidMutual Fund Investments are Subject to Market Risks, Read All Scheme Related Documents Carefully.
Also read:
The sketchbook of wisdom: a hand-crafted manual on the pursuit of wealth and good life.
This is a masterpiece.
, Morgan Housel, Author, The Psychology of Money
