Thread by @jposhaughnessy

1/ “Discipline is the bridge between goals and accomplishment.”
~Jim Rohn

Being highly disciplined is extremely difficult. It goes against almost every impulse we have baked into our genes. Sure, it’s easy to be disciplined when things are going your way.

2/ Real discipline kicks in when things are going against you, sometimes significantly. When every week seems like a month, when you are filled with self-doubt and constantly questioning every single part of your investment process, when others express skepticism about your core

3/ beliefs, and even friends and colleagues begin to doubt you and your process, that’s when discipline is required. You know what it’s like to feel horrible about yourself and your ideas, and you suddenly really understand the opening of Shakespeare’s 29th sonnet

4/ “When, in disgrace with fortune and men’s eyes, I all alone beweep my outcast state, and trouble deaf heaven with my bootless cries, and look upon myself and curse my fate…” That’s when you really need discipline if you are to succeed.

5/ And, like most things in life, that is precisely the moment when you want to shout: Stop! Every event and news item you see is the opposite of what you believe, and your emotions and intellect shout:

6/ Stop! And every single thing you read or hear people say remind you that you are wrong, that you must abandon your silly persistence and allow this pain to stop. Just let it stop. The emotional pain is so overwhelming that it feels like slow torture, day in and day out,

7/ and all you need do to make the pain go away is to abandon your silly process and allow yourself to breathe.

And if you continue to stick with it, even when every single thing conspires to dissuade you from your consistent application of your investment ideas and principles

8/ you’ll also know that you may be wrong for a lot longer than you think you can endure. What’s worse, you won’t have to just put up with your interior fear, doubts and pain, you will often be derided, mocked, and ridiculed by many other people who think you’re simply a fool.

9/ All of the recent weight of the evidence will be on their side. Not only that, but experience teaches that they don’t come alone, they come in crowds. The criticism can be deafening, snide and cruel and this can be devastating to your psyche.

10/ According to a March 22, 2012 article in Psychology Today magazine listed “The (Only) 5 Fears we all Share”:
1.Extinction;
2. Mutilation;
3. Loss of Autonomy;
4. Separation and
5. Ego-death.

11/ Each of these also plays a part in feeding your self-doubt and desire to abandon your discipline, but 3, 4 and 5 are the ones that are the cruelest in this instance because they feed everything you are feeling.

12/ Loss of autonomy is the feeling of “being controlled by circumstances beyond our control.” Separation is the feeling of “rejection, (and) not (being) respected or valued by anyone else.” And ego-death is “fear of humiliation, shame…or the shattering…

13/ of one’s constructed sense…of capability and worthiness.” The only thing you can do is hang on to the idea that “this too, shall pass.” Not much of a lifeline, is it? I go on at length about this because I have been there more times than I care to remember.

14/ And the question you must answer honestly is—in the throes of underperformance or rocky market conditions, do you really have the discipline to remain unemotional and stick to your plan? According to a post by Ben Carlson discussing Charlie Munger’s ability to withstand

15/ drawdowns, he wrote: “Many people simply weren’t born with the correct wiring to be so unemotional…The ability and willingness to take risk are not always equal for most investors. Charlie Munger is a one-of-kind. It’s good for investors to remind themselves of this

16/ when trying to emulate him. Very few can.” Thus, be brutally honest with yourself. Market downturns can be incredibly scary and ignite our reptile brain that is pure emotional response. But, if you can remind yourself again and again that we've been here before and will

17/ here again, it might let you think about the fact that these swoons are a feature, not a bug and are the very reason stocks (with all their short-term risk and volatility) are such great long-term performers. Remember, this too, shall pass.

18/ Now take a break from it all and enjoy the holidays. The markets aren't going anywhere. Decompress, enjoy your family and friends and then be prepared to go onward. Happy holidays to everyone!