Thread by @Niraj_dugar

Have been reading quite a few articles from @morganhousel from his @themotleyfool days. Few learnings and links -

Most fields have a positive correlation between efforts and rewards. except investing. Not doing anything over longer periods is most rewarding thing. But its not intellectually stimulating. The edge is in not doing anything.

fool.com/investing/2016…

"No one is smarter than the collective intelligence of millions of other investors. Some, however, are a little more patient and less emotional. That's where the potential for "edge" is found."

Be patient. For decades. I know its hard.

fool.com/investing/2016…

Knowing and expecting that there will be recessions in future is wise. Forecasting recessions is sheer waste of time. Forecasting leads to action aka timing, trading, buying and selling, all of which would only lead to lower your returns.

You'll eventually end up losing more than half of your money in a diversified portfolio. But the returns from the other half will more than compensate for your losses. Focus on portfolios and not on individual investments.

This is what Index investing does. @PassivefundsIn

"Own stocks to the extent that volatility does not scare you out of markets. Rest can be in cash and bonds."

This is what i do. I invest only that much which i do not want for the next 30 years. Rest is cash and bonds. I sleep well at night. Thanks @morganhousel

Like every individual has a different personal story, every situation can be seen from multiple perspectives. Rising interest rates can be disastrous for borrowers but a boon for retirees. Before concluding if a situation is favorable or unfavorable, try to look at the other side

Prevention is better than cure. Simple ideas are, simple, but complex ideas are intellectually stimulating. Psychologically, persuading anyone to adopt simpler ideas in life is a tough job. Simpler ideas usually have higher success rate.

Keep it simple?

fool.com/investing/2016…

Success comes at the cost of small failures and accepting them. You cannot stick to the ordinary in a competitive market place. Keep trying new things but let the cost of failures be insignificant to not hurt your “ordinary” business.

Keep losses small.

fool.com/investing/2016…

Zoom out and you will only see growth in the markets. Zoom in and you will see multiple periods of volatility. In order to enjoy the rewards of zoom out zone, you have to go through multiple zoom in zones.

Short term compromise. Long term riches.

fool.com/investing/gene…

Contrarianism is a hype. Being contrarian means taking the road alone. And it’s not everyone’s cup. Markets will reward you even if you just remain patient and invested instead of trying to outsmart the markets.

Most people overwork for few extra points.

fool.com/investing/gene…

Reiterating to invest only enough money in markets which is not required to pay your bills. Let everything else be in bonds and cash. Do read this one to understand how to make better bets in life and investing.

fool.com/investing/gene…

Knowing what not to read is equally important as knowing what to read. Avoid political opinions disguised as investing analysis, time horizons that are different than yours and excessive length and unnecessary details.

fool.com/investing/2016…

A lost decade doesn't mean you go 10 years without making any money. It means you make and lose several fortunes, each successive one tearing away at your faith and patience.

A bear market doesn't just mean stocks go down. It means they frequently have huge rallies amid the backdrop of decline, offering hope and optimism every few weeks that's snatched away just as fast.

fool.com/investing/gene…

Real contrarianism is painful. It's lonely. It hurts.

It happens when your clients threaten to sue you for negligence, your friends stop calling, and your wife wishes you'd find a new career. It's buying shares of Valeant, or Theranos, today.

The good news – the solution to the irony of contrarianism – is that deep contrarianism isn't necessary to achieve good returns.

Your edge is found in being more patient than the crowd, rather than trying to outsmart it.

fool.com/investing/gene…

Having a down year or even a down decade doesn't necessarily mean you made a mistake or should change your strategy. It means you're playing a game of probabilities that don't add up to 100 in every time period

contd.

You shouldn't play Russian Roulette even if the odds are in your favor. Think of investing similarly, and ask "are the odds of success in my favor?" is "are the odds of failure enough to ruin my life?" Countless financial funerals are owed to high-probability bets taken by people

This one is one of my favs

The odds that stocks will fall 30% this year are pretty low. But if a 30% decline in your stock portfolio will prevent you from paying your bills, stay the hell away from stocks. No one knows exactly what the future holds.

fool.com/investing/gene…

A subpar investing strategy that you can stick with and apply consistently will nearly always outperform a brilliant strategy you give up on.

I honestly think its all about how much you save vs. how much returns your money generates. Returns are incidental. They will come.

Picture the most reasonable worst-case. If u can survive it financially, forecasting the next bear market or the next recession - or in Gawande's world, the final six months of life – becomes less relevant.

"Prepare for the worst, hope for the best" - Me
fool.com/investing/gene…

older generations never invested on their own like today's workers do. mass-scale investing is young – no more than a generation old. It explains why individual investors routinely make such awful investing decisions

fool.com/investing/gene…

All of us invest because we have goals, and most of those are designed to make us happier. But I'm often amazed at how much effort we put into chasing things that probably won't do us any good while discounting and ignoring the stuff that probably will.

fool.com/investing/gene…

Another important one.

All you need to know is what not to read - political opinions, disguised as investing analysis, time horizons that are far different than yours, excessive length and unnecessary detail.

fool.com/investing/gene…

It's hard to believe that you can be wrong more than half the time and still make a fortune. In any portfolio, whether indexed or active, the majority of gains will likely come from a small minority of stocks.

It's hard to believe that the whole concept of retirement is only about a generation old. A lot of the reason most people aren't good at investing is because the idea that you save and invest for yourself in order to fund a third of ur life without a paycheck is new and untested.

It's hard to believe that over the last 100 years the S&P 500 rose 273-fold, but adjusted for dividends it rose 18,520-fold. Never has so little attention been paid to a portion of investment returns that matters so much.

It's hard to believe that with historic average market returns, a 1% management fee will reduce your account balance by almost 40% over 50 years.

In a perfect world CNBC would have a perpetual box on the screen that just said "FEES. WATCH OUT FOR FEES."

fool.com/investing/gene…

the biggest investment fees are intangible. They're the ones you pay through anxiety and uncertainty. if you want something nice, you have to pay for it. You, the investor, have to be willing to put up with market declines. That's the admission fee for long-term returns.

You actually get this bill in the mail, but it doesn't look like an invoice; it's an account statement showing your portfolio is worth less than last month and no exact timeline of a rebound. It's a mental surcharge that you pay with cortisol rather than cash.

I absolutely believe that stocks are the best game. I don't think there is a better way for the average investor to grow their wealth. However, this is called investing and the price of admission is gut wrenching drawdowns and sometimes years and years with nothing to show for it

The stock market doesn't owe you anything. It doesn't care that you're about to retire. It doesn't care that you're funding your child's education. It doesn't care about your wants and needs or your hopes and dreams.

fool.com/investing/gene…

Pessimism shows that not everything is moving in the right direction, which helps u rationalize the shortcomings we have. Pessimism requires action, whereas optimism means staying the course.Optimism sounds like a sales pitch, while pessimism sounds like someone trying to help u.