Successful Investing Can Be Difficult

Beloved, I pray that you may prosper in all things and be in health, just as your soul prospers. (3 John 1:2 World English Bible)

Successful investing can be difficult, illogical, and sometimes downright precarious. If investing were easy, then everyone would be rich, and as we all know, everyone is not rich. That being said, we must embrace reality and deal with it.

Investing is a craft, not an exact science. No financial institute, business school, textbook, investment guru, portfolio manager, or analyst has a magic formula or foolproof system for investing. That’s not the world we live in. A thorough understanding of investing is the essential foundation for good results. As Charlie Munger, vice chairman of Berkshire Hathaway, puts it: “It’s not supposed to be easy. Anyone who finds it easy, is stupid.” It takes know-how, wisdom, skill, sound judgment, time, and nerves of steel to be a great investor.

Unfortunately, the stock market and global economy are complex and chaotic. That is to say, there are too many factors and forces at work at any given time to accurately predict their outcomes. There are hundreds, if not thousands, of economic and political events that take place during any given day. Inflation, unemployment, money supply, wars, and natural disasters (to name a few) can and will have an impact on your investment portfolio. That’s a big problem because it’s impossible to predict the impact of all such occurrences. Put simply, the future is uncertain.

The essential conundrum, as Howard Marks, co-chairman of Oaktree Capital Management, puts it:

Investing requires us to decide how to position a portfolio for future developments, but the future isn’t knowable.

A good example of a complex and chaotic system is the weather. Even though a meteorologist may know historical patterns and current conditions, there is no possible way he or she can accurately predict what the weather will be in a month, year, or decade from now.

Another useful example is to imagine holding a handful of helium balloons and then letting them all go at the same time. It is impossible to accurately predict or calculate where each of the balloons will end up. The truth is, the best we can do as investors is to deal in probabilities—not absolutes. That’s bothersome.

So, what is an investor to do?

Do your homework before investing your hard-earned dollars, accept your fallibility and acknowledge the fact that not everything is going to work out the way you want it to. OR hire a veteran investment professional.

In my latest book, How to Be A Great Investor, I outline several steps and principles you need to know before you invest. My book can save you a great deal of grief, time, and money.

This is what Lisa G. had to say:

I have a better understanding of the stock market. This can be a golden opportunity for those who take the time to learn what Richard has to say. I learned so much – it was extremely helpful.

You can order a copy on greatinvestor.org or on Amazon in paperback or Kindle. It is worth every cent.

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Thanks, and Blessings!

Do you really want to become a better investor? Then pattern yourself after those who have already proven themselves successful.