Over the weekend I have been reading the classic Letters from a Stoic. The book has many insights towards living a truly pleasant life. One without fear or regret. Many of these can apply as investing lessons also.
I loved how the author Seneca encouraged a lifestyle that sought to be always learning. That one must read, and focus on one book at a time so that you can fully absorb and practice what you learn. Only then will you reap the benefits.
Along with other great nuggets of wisdom, I also particularly liked the following quote. “Each day acquire something that will fortify you against poverty, against death, indeed against other misfortunes as well… select one to be thoroughly digested that day.”
I really believe that you are looking for the investing quick fix, that you will fail.
Instead you need to focus on building your investing skills and knowledge. Part of this involves challenging yourself to be a better person. To constantly grow.
Who better to look to than the ancients. The best ideas aren’t owned by one person or corporation. They are common property, and are available in books like the Bible, Letters from a Stoic, and other timeless classics.
The most important lessons of this world are available to anyone who seek them out.
What is the point of becoming the wealthiest person in the world, if you aren’t strong enough to sustain it? What will be the point of hitting the Wall Street jackpot, if you don’t have the wisdom to best steward it (and enjoy it)?
Contrary to some beliefs, you aren’t entitled to wealth or success. The universe owes you nothing. Only through humility and perseverance can you achieve your fullest potential.
Becoming wealthy is more than having a lot of money. It also means being healthy and being wise. Enjoying the present, while feeling secure for the future.
These things are as important to me as getting rich. So I spend time to read books outside of the investing space. As much as I spend reading about investing. So far it has been fascinating. I’d encourage you to do the same.
I choose to read books based on recommendations from people I trust. From my favorite blogs, to my favorite podcasts. If you’re interested in this too, I wholeheartedly recommend some of my recent favorites: Letters from a Stoic, The 4-Hour Chef, The Millionaire Next Door, The War of Art.
Many of the principles from this book parallel quite important investing lessons. Oftentimes it’s lessons like these that beginners miss. You can’t blame them, but you can learn from them. Do yourself a favor and remember these investing lessons for yourself.
Investing Lessons #1
~~Prepare for your end game strategy [Know when to sell]
The famous philosopher Seneca talked about death, and how it is unavoidable. How you should appreciate every day you are given, because every day is a day closer to death.
Investors absolutely should do this too. No matter if you are buying stocks, bonds, or mutual funds, you need to have the finish line in your mind.
On exactly what conditions will you sell? You need to know exactly what your investing goals are (Click here to learn how to set your own investing goal).
When investors don’t think about what will cause them to sell, they often sell at the worst times. If you can’t picture yourself staying calm during a stock market panic and crash, then you will fall victim to the chaos just like everyone else.
A prudent investor should learn about the warning signs of a company in trouble. They should have a specific reason for selling, a specific plan for every dollar.
It’s not easy to think this way, I know it. But it’s the only way to stay sane when the world goes insane.
Investing Lessons #2
~~Don’t have unrealistic hopes for the future [Skip the hype]
Do you know what amateurs are best at? They are best at following the crowd. Buying the hype. Following the hot stories.
And ultimately, getting wiped out like everyone else.
The stock market isn’t an easy game. If it was, everyone would play. But the market is inefficient just as life is inefficient. It has its defects and mistakes. If you want any chance at success, you must must MUST think more than your average Joe investor.
You see the story stocks are nothing new. Every single bull market we have ever seen has had story stocks and hype.
Whether it was T.V. stocks in the 1920s, or airline stocks in the 50s, or internet stocks in the 90s, these stocks have soared to new heights and then crashed even faster.
Technology stocks are always the worst offenders, because there is always new technology! When the T.V. and radio first was invented, guess what, they were the technology stocks of their time. Today we call them Google, Amazon, and Tesla.
But the name of the game for these new stocks is that a whole industry gets hyped, and only a few champions remain. Many of the champions never recover to their once glorious highs when they were hyped.
So in every decade we have ever seen, millions of dollars gets lost in new technology stocks. Everyone follows the hype and everyone gets burned.
The successful investors are the ones who stay away from unproven industries. You can make a fortune from buying boring stocks that have been around already for decades. In fact, this is the best way to do it!
Don’t get sucked into the Russian Roulette that is new technology. Finding long term success in those stocks is a crap shoot.
Sometimes your best advantage is also your worst danger– unchecked hope is one of these things.
Investing Lessons #3
~~Stop worrying about what you can’t control [Ignore the headlines]
If you’ve been following my blog for any sort of time, you know I’ve been speaking out against the media time and time again. Unfortunately there will always be people who don’t get this message, and many will have to learn the hard way.
So much can happen in your life if you just let go of the things out of your control. It’s so easy to focus on results instead of methods.
But I tell you this, the secret to long term wealth comes from methods, not results.
Any idiot can get lucky with a stock pick. There’s hundreds of examples like this every day. Just look on an investing forum with a Tesla or Google fanboy.
Guess where they are going to be in 5 years? Yes, just like the washed up jock who reminisces about high school as the prime of his life, these lucky stock pickers will reminize about the great fortune they once had.
Why am I so confident in this outcome? Because they never learned the methods to successful investing, they will never be able to replicate their luck again and again.
Ask any successful person– what was the single most important part of your success. They will say something like, “actually it wasn’t just one thing. I did a lot of little things right. Or I worked hard for thousands and thousands of hours.”
Investing is just the same. Successful investors never talk about their one successful trade. That’s because they have made many successful trades. Their success comes from many times of winning.
Yet when you ask the average newbie, they don’t know this to be fact. The average newbie has the same lottery mentality that plaughes our country.
What happens when you focus on this, on the results instead of the methods? You get insecure, nervous, uneducated investors who feast on media outlets like CNBC and the Wall Street Journal as if they carry the cure to their anxiety.
What are the results of this anxious ritual, one where the investor is constantly checking ticker prices more frequently than the Facebook newsfeed? Well when the market turns sour, this investor sells at the bottom.
Breaking every rule any simple method would tell you not to.
This is why there is so much money in the world of Wall Street. This is why there are so many brokers, banks, newsletters, and other investing services.
There is a deep pain in Wall Street, and it happens with every bear market. It sees hardworking investors lose money instantaneously.
It scares people. No one is immune. But the best investors ride through the market’s ups and downs. That’s how they make a fortune.
And they are able to do it by ignoring the headlines.
**Investing Lessons from Ancient Philosophy**
**All Rights Reserved. Investing for Beginners 2013**
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