The process of investing can be absorbing and fun. And it can be dangerous if I don’t do enough work. That’s me paraphrasing something Peter Lynch, the outperforming fund manager, wrote in one of his books. And my own experience over the years has revealed to me the truth in that utterance!
Why I’m not an obsessive investor
But even though I’m keen to build up my wealth over the long term, I’m not prepared to obsess over my investments to the exclusion of all else. And, fortunately, I don’t have to. Awesome investor Lord John Lee, for example, gave his investment book the title How to Make a Million — Slowly. And he’s invested his way to several of them in his lifetime. On top of that, he’s enjoyed a long and successful parliamentary career, as well as holding several public and private chairmanships and positions.
However, by not doing enough work with research and stock analysis, I can end up obsessing over my losing positions! Yet even that statement is an over-simplification. The world of investing isn’t a straight choice between black or white — there’s grey and also a whole rainbow of colours in the middle. Or, to express it another way, the volume control doesn’t just move from one to 10 — there are all the numbers in the middle to move through as well. So, investing is like most choices in life, whether we are talking life partners, political views, TV programmes, or anything else.
Nothing is guaranteed
For example, I can research and analyse the stuffing out of stocks and still maybe end up sitting on a clutch of underwater positions. And I can shoot from the hip and buy random, unresearched shares and sometimes make a killing.
But over the long haul, I know dedication to learning and self-development can pay off. Investing is a long game rather than a punt at a fast buck. And in the pursuit of compounding gains, I’m putting sustained efforts into improving my investment skills.Â
And one of the best teachers is experience. But that’s only beneficial if I learn the lessons from my mistakes and feed them back into my investment process. It’s not the only way to learn though. Successful investors are generally fond of sharing their experiences (unsuccessful investors, less so). And there’s a whole library of books out there dedicated to the art and science of the process of investing.
Learning and applying
For example, the so-called father of value investing, Benjamin Graham, wrote a great book called The Intelligent Investor. He’s well known now because Warren Buffett said that book was the best on investing he’d ever read. And it framed Buffett’s own investment career. In fact, Buffett studied under, and then worked for, Graham early on in his own career.
Graham was a successful investor himself. But investing, and writing books about his methods, formed only a part of his interests. Graham enjoyed many activities in life and put plenty of his time into each. So, with some spare time for money management, I’d dive right in and invest. And I’d read and learn from everything written about it by Peter Lynch, Lord John Lee, Benjamin Graham, Warren Buffett and others. Those twin pillars form my process for targeting gains from shares without obsessing.