Four Rules for the Calm Investor

24/8/2020.  From time to time, most investors encounter emotional highs and lows.  The elation of seeing an investment soar.  The stress of deciding whether to stay invested during a downturn.  The regret of not having purchased earlier.  The fear of missing out when others seem to be doing better than you are.  The long-term unease about whether you are doing the right thing.

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.  

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