Investing success: Skill, luck or just good karma?
Subscribe to enjoy similar stories. I remember my chemistry teacher writing a question on the blackboard, followed by five sacrosanct sentences! Writing those five points in the answer ensured we would get the maximum possible marks from the board examiner. This was almost ironclad, and you knew nobody could outscore you on that answer.
In school, a structured answer guarantees success; the rules are clear, and outcomes are predictable. Unfortunately, in the investing world, there is no such equivalent. Whatever your chosen investing process, there is no guarantee that you will get the best possible score.
You may well be outscored. It’s not that long-term investors have a singular style. Some swear by the philosophy of margin of safety, while others may invest only in high-quality businesses with a moat.
Some may be guided by momentum and others may swear by being contrarian. There is no singular truth in the investing world and there are far too many approaches for me to list here. Each of these approaches or ideologies has its pantheon of idols, who are cherished and hero-worshipped.
Even a straightforward strategy like Index Investing has its heroes. Each of these investing strategies has worked for many, but not everybody, and over time, but not at every moment! It’s good to remember that the stock market is a place designed to humble you. When you combine investing ideology and an ego that cannot accept being outscored by another participant, it is a recipe for misery.
Somebody will always be making more money than you. The ardent, disciplined pursuit of your investment strategy is no guarantee of outperformance every day or every year. Mr Market is a rather moody person.
Read more on livemint.com
