Thread by @jposhaughnessy

1/ “in the realm of ideas, everything depends on enthusiasm, in the real world, all rests on perseverance.”
~Goethe
Knowing isn’t enough. You must act. Action without knowledge is foolish. Knowledge without action is futile.

2/Successful investing comes down to an act of will. To be a successful investor, you know you’ll never be right all the time. You know that you will only buy at the low or sell at the high accidentally. You know there are no sure things, only probabilities.

3/In many ways, successful investing runs contrary to human nature. It’s far more “natural” to follow the crowd; let your emotions dictate decisions and to approach investing with no underlying cohesiveness or consistency.

4/It’s natural and easy to see things the way you’d like them to be rather than as they are. It’s natural to fall into bad habits without ever questioning the way you are making decisions. It’s also toxic to your investment results.

5/Successful investors do not comply with human nature; they defy it. There’s nothing natural about successful investing. It’s not natural to dispassionately watch others ger caught up in spirals of greed and fear, causing bubbles and crashes and remain unmoved.

6/It’s not natural to remain unemotional when your money is at stake. It’s not natural to avoid fads and group fancies. We are a heard animal, so doing so is fighting directly with your DNA. It’s not natural to persevere in a rigorous, unemotional and consistent manner,

7/no matter what the markets are doing. Yet it is the path to long-term success. When making decisions, we tend to view everything in the present tense, we time-weight information, giving the most recent the greatest weight. Think of the present—right now.

8/Does an investment strategy look irresistible to you? Chances are, it’s had a great run recently, is the subject of great attention in the media and is supported by “obvious” facts. My experience says following this path won’t end well.

9/Successful investors look at history and how all markets have behaved. They unglue themselves from the present and react to the present in terms of its antecedents and what can reasonably be expected in the future.
Yesterday and tomorrow, as well as today, make up their now.

10/Do I know what the market will do for the rest of the year? No.
Do I know what the market will do over the next 5 years? No.
Do I know when the next bear market will occur? No, but I know one will.

11/Do I know that stocks will be the best investment over the next 20 years? No, but history and probabilities tell me that’s the way to bet.
Life is a fragile and uncertain thing; I know that a lot of what I “know” ain’t so.

12/ But I, like you, like everyone, must make my way in this world. I think the best way to do that is to study what has gone before us and expect that much will change in the future in terms of technology, businesses, innovations and surprises.

13/But I will continue to persevere because I think the one thing that won’t change is human nature. That’s my edge, that’s all our edges, and I think it’s a good one to bank on.

Thus, I persevere.