Hard work creates satisfaction, if not easy money.
We could make easy money through speculation, but we risk deterioration of mental models, like stress, sloth, or gambling problems. Easy doesn’t mean that the gain is without any cost. Making money at the command of thought ought to be difficult, right?
The mistakes allowed should be minimal, as we could make endless mistakes, and the time is only limited. Even when time isn’t a deterrent, the ever-so-degrading appetite for uncertainty discourages one from perpetual, overbearing risk. How, then, can a continued practice deliver consistent returns? To qualify as ‘honest’ living.
To make it honest, a lot of hard work is required.
It is wrong to presume that little to no effort is associated with selecting stocks to invest (trade). Here, the effort is not single-dimensional and output-driven, such as accounting or coding. There is a deeper commitment to the process at play. It (often) involves research and study of underlying factors, sustained practice of the process of execution, and computation of expected probabilities. All fancy jargon to describe a systematic approach. But after these systems are perfected, the output (often) comes out packaged in a wrapper of effortless, almost arrogant, satisfaction. Behind the scenes, long hours are spent contemplating the methods and dealing with failure. More so, what makes for confidence in these matters is the mark of having dealt with, in the past, and the ability to handle, in the future, undue and undeserved Failure.
The possibility of failing is ever present with accompanying risk. We must deal with one to handle the other. In this line of work one can’t be deterred by either. Careful discipline of acknowledging risk, avoiding failure and aiming for growth must be followed. To cut the losses short and be profitable in the long run. It does have its rewards, which one can appreciate. Yet, whatever success we wish to achieve must be long-term with as little reliance upon the daily decisions and more emphasis upon the creation and exchange of value. It becomes paramount here—the role of Patience.
Patience in investing is the invisible grain that makes up the foundation of all tall investment vehicles and fat returns. It is a handy tool for dealing with uncertainty, but its mechanism could be more lopsided than otherwise. None can explain why a good decision could appear bad during the initial days. No one knows why it makes sense to be right and suffer temporarily rather than be wrong and gain momentarily. To the patient, it only makes sense.
As if time reveals only after obscuring something, placing patience at the epicentre of all speculative strategies. But only when one is right in every other consideration leading to the decision. The study, the research, the timing, the price, the news, the event and whatnot—all must fit. Then one can hope to be right and wait for the reward.
It now appears that the business of speculation is not only one of hoping and waiting, but also of studying, observing, applying, guessing and questioning.
The answers only come as the return on investment.
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