The investor’s chief problem, and even his worst enemy, is likely to be… himself.
– Benjamin Graham
Benjamin Graham was an investment icon of his time, and was the chief mentor of Warren Buffett. He is well known in investing circles for his many tidbits of wisdom, and memorable quotes. It is possible that the quote above was his most insightful observation of his career.
Our investing philosophy at Concentus is grounded in a firm belief that successful investing is much more about the behavior and emotions of the investor than it is about picking investments. We have also observed that there is one emotion which is by far the most powerful and influential over human behavior, and that is fear.
It is easy to feel emotional and fearful during times like this month. The headlines are filled with stories of government shutdowns, North Korean missiles, trade wars with China, and a slowing economy due to higher interest rates. Every human is prone to fear – it is part of our hard wiring to experience fear.
During times like this, when fear is in control, perspective and patience are in short supply. We have a natural tendency to lose all sense of rational perspective, and to become extremely reactive to momentary events. We can only imagine that the old cliché: “Don’t just stand there, DO SOMETHING!” was first recited in a time of fearful events.
This week our firm came across a great article, with loads of excellent perspective about markets and human emotions. We highly recommend this excellent piece for your weekend reading pleasure:
If you take nothing else from it (or you don’t have time to read), remember this line:
If you don’t want to invest in equities because you fear a market crash, then you shouldn’t be in equities. However, you must also recognize that, if you avoid stocks, you will almost certainly have a lot less money and, the longer you live, the difference between what you have and what you could have had will compound…a lot.
We also wanted to share on final thought we saw today from @charliebilello…
Without risk there would be no reward. Be thankful for markets like this.
— Charlie Bilello (@charliebilello) December 20, 2018
Not always easy to do, but an important thought to remember.
On a more important note, our family here at Concentus would like to wish you and your family a wonderful and magical holiday week. We hope that you will enjoy a week with family and friends and good cheer, and we wish you all the best of health, happiness and prosperity in 2019!