An accepted truism of investing is that ‘our emotions are our own worst enemy’, but in today’s world our emotions are constantly assaulted by gloomy economic news and scary financial headlines. So, how can an investor stay calm, relaxed and confident?
Calm investing is like a stage-magician’s conjuring trick. Observers may be in awe to see the feat performed, but once the secret is revealed, we think to ourselves ‘Oh, is that all there is to it?’ When we understand the basic principles, the mystery dissolves.
What the ordinary investor really cares about is this: If the worst happens, will my money still be there, when I want to take it out?
A solid, comforting, Yes response to this question does not require mirrors, secret compartments, or sleight-of-hand. The purpose of ‘Four Rules for the Calm Investor’ is to take away the mystery and expose how the trick is done.