How Can We Ignore The Noise In The Market?
Everyone wants to earn money from investing, but we need to realise we’re all playing a different game. The honest answer to almost all question for anyone who is trying to make sense of the financial world is, “It depends.” Which way we should go depends on where we already are. What are we comparing ourselves to? S&P 500 Index? Rate of inflation? Who are we comparing ourselves to? Our colleagues? Our friends? Warren Buffett? When are we comparing ourselves to? 1 month ago? 1 year ago? 1 decade later? Perhaps we could also ask, why are we comparing ourselves to anything at all? There will be moments when we need to acknowledge the power of enough. Compounding at 12% per year and having the ability to say I’m happy with this level of risk and return is a major feat.
It is incredibly remarkable to come to terms that we just want to chill and rotate slowly under a warm light like a 7-eleven hot dog.
It isn’t easy, especially in today’s world. We’re constantly bombarded by someone else making more than us in a significantly shorter timeframe. Gradually, we become reactive. However, we need to understand that the common label “investors” has many variations within the group. It is simple to lump everyone into the same category. We’re all investors. We’re all playing on the same field. We’re in the same market. But we’re all playing wildly different games. There is no one right answer when it comes to investing. We have different backgrounds, life experiences, jobs, role models, risk tolerances, goals, work-life balance targets and the list goes on. What you want and willing to stomach might not be what I want. This is why managing our financial expectation is important.
We have a common goal of earning money, but we differ in terms of how long it takes to make how much we want to make.
Often, we’re caught up in trying to beat the bear (pun fully intended). Two hikers came across a bear. One hiker begins to run. The other shouted, “You fool, you can’t outrun a bear!” The first hiker responded, “I don’t need to run faster than the bear. I just need to run faster than you.” We keep trying to do this. We keep trying to be slightly better than the nearest competitive obstacle and some of us will make it. However, it can still feel terrible. It feels terrible, because we have a vague idea of our game. We haven’t clearly defined it. We don’t know what game we’re playing and we put ourselves at higher risk in taking cues and advice from people playing different games. They have a different risk appetite, desired timeframe and a ton of factors influencing why they do what they do. This results in a lot of investing tips and tricks to be relative. We’re all chiefly at the mercy of chance. Sometimes it isn’t about running a little faster than the person beside us. Sometimes it may be about identifying where exactly we are running towards and deciding when do we sprint in this marathon.
