The Beauty of Boring, Successful Investing is Dull

brown and white English bulldog lying on grey pavement

“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” - George Soros

Hollywood makes investing out to be an action-packed affair. Traders screaming on the phone, papers flying, underdog geniuses crunching numbers to uncover million dollar insights. Now some of this does happen, but it's very rare.

Stock picking itself is seldom successful, over 80% of active fund managers fail to beat their benchmark. Index investing - where you're trying to be the market instead of trying to beat the market, has been shown time and time again to be the most reliable and sensible way to invest.

Of course, no one would watch a movie about a group of do-it-yourself investors buying ETFs and slowly building up a comfortable retirement.

Successful investing is dull, this is something investors should accept. It's simply having a plan, saving your money and investing regularly in a risk-appropriate portfolio. It's not complicated or exciting, but boring works.

If you're seeking excitement, it's best not to do so with your retirement savings. You're better off taking up a new hobby, going backpacking, or skydiving. These are less expensive and safer alternatives. Yes, even skydiving is safer. There's only a 0.0007% chance you'll have a fatally, whereas with stock picking, you're a near-guaranteed loser.

Chasing exciting investments is inherently counterproductive. The more exciting a stock or asset, the more likely it's overbought, over-owned and overpriced. These are characteristics for low future returns. Consider the folks who FOMO'd into bitcoin in late 2017 at the height of the mania, only to have it crash 70%.

Resist the appeal of excitement, embrace the boredom, and get rich slow.

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” — Paul Samuelson

Comments

The Art of Giving Feedback

Constructive feedback is an awkward affair. You don't want hurt feelings, but recognize the importance of honesty. You've tried the classic "hoping things will get better on its own" and unfortunately it hasn't played out. When giving feedback, here are a few things that I try to keep it mind. Start with empathy. Step into their shoes and understand their story. If you don't know, ask. Be genuinely curious. Feedback is a dynamic affair. Shared communication with a shared goal towards progress. Take the emotion out of it. Focus on the situation, not the person. Focusing on the person adds unnecessary weight to an already emotionally-bloated event. Be specific. Give clear examples. Vague feedback equals dismissed feedback. Doing above won't de-awkward things fully, but it will dampen it and increase the chance of better outcomes.

ELI5: The Stock Market

Today we get back to basics and answer some of the most common questions about the stock market.

Step One is Knowing

In school, we listen to our teachers. At home, our parents. Throughout our childhood, following instructions is praised and rewarded. When we're young, there's value in this. We don't understand how the world works quite yet, so guidance can be lifesaving. The bias to just accept obviously has drawbacks. Insert old jumping off a bridge adage . This conditioning is especially strong for kids from lower income households. Their parents are more likely in working class jobs involving strict order-taking. Parents of middle-class households tend to be knowledge workers where influence is essential. Studies have shown kids from middle-income households are more willing to negotiable with their teachers. They learn from their parents that things are not set in stone. This leads to better grades and learning outcomes when compared to their lower income counterparts who don't negotiable. In business, if we simply accept things as they are, we would never innovate. In work, w

Herman Ye

Search