DAD - DISSONANCE, ANXIETY & DISSATISFACTION
1) Dissonance (Not Knowing the Reason / Goal Behind Investing)
This is also Mindless Investing. It is vital to have a clear Investing Goal and Purpose without which the journey has no traction
2) Anxiety: Anxiety appears because of a lack of knowledge and conviction.
Every investor needs to be educated about the process of investing. Equity investing risk only means Volatility & Notional Losses at times. Equity Returns eventually revert to the mean & compound over time. Credit Risk can be more painful than Equity Market Risk. This is because while Credit Risk can leave behind a Permanent Scar on the Portfolio, Market Risk is more temporary in nature
3) Dissatisfaction: While at one point an investor is fearful
But ironically once the investment starts working in his favour, he or she becomes greedy and demands soar. He or she loses focus on the Goal and Purpose and instead compares his or her returns with those of other funds that may have got higher Returns after traversing a more volatile path. We tend to discard the path and look at the results for comparison and feel unnecessarily dissatisfied.
So dissatisfaction, greed, comparison and losing focus on the larger Purpose are perhaps the biggest of all the enemies of Investing
Thus remember these Enemies of the Investment Process and keep them at bay, Away At a Distance.
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