Even though we have more financial data than ever, investing is just as much an art as it was when Ben Graham criticized it almost a century. Investing is not a hard science like chemistry or physics and there are no laws or unbreakable rules although data-driven models do work every now and again. Equally smart people can have opposite views and, oddly, be equally successful.
Although I said it is art first, having a good grasp of subjects such as mathematics, finance, accounting and economics is still very important. However, there are also other subjects that one must understand in order to be successful in investments. These may include the following: political science, history, sociology and psychology.
Apart from crunching the numbers, having a healthy appreciation of the arts can help investors synthesize seemingly disconnected events in order to come up with more informed investment decisions!
Successful investing is not about perfection. It is about prudently governing one’s behavior, which over time leads to more success and less failure.
The art of Lazy Investing
"People waste years of their lives not being willing to waste hours of their lives. If you mistake busy-ness for importance — which we do a lot — you're not able to see what really is important." – Michael Lewis
Have there been potentially great projects in your own life that you didn't get to explore because you didn't have the time to waste? It is better to do something and confirm that it did or didn’t work rather than always wondering or regretting that ‘what-if’ scenario.
This is one of the reasons why I have become an advocate of lazy investing. If you are pursuing a job or career you like; perhaps doing something you absolutely love but also need to be “Adulting” or provide for your Family, then lazy investing can definitely be an option to help yourself. You don’t have to dive into the nitty-gritty details and simply follow a disciplined or perhaps even automated path to save-and-invest for future goals (such as family, travel, house or retirement).
Why Does Laziness Pay Off? The key is diversification. Diversifying your portfolio with both fixed-income and equity securities allows an investor to limit losses during periods of bearish equity performance. Doing this yourself may take some time, effort or even some errors due to learning curve; but this is where pooled funds come into the picture. An example to this is an Index Fund. The science of investing is done by the professional stock market traders maintaining the index while me as an investor subscribe (or ride along) to this strategy.
“Good artists borrow, great artists steal.” — Pablo Picasso
The return investors gain is not a result of taking big risks since you are copying another’s strategy. Just sit back and concentrate on things other than investing. In this case, it's okay to be lazy I’d say. This strategy offers sound gains while allowing investors to sleep soundly each night or perhaps even forgetting about it because you are busy experiencing a great time of your life pursuing your hopes, goals and dreams.
How lazy are you when it comes to investing?
* * *
The writer is an RFP® - registered financial planner of RFP PH, Licensed Real Estate Broker and Director of CERTA, Inc.; To know more about financial planning and training services, please visit www.certa.ph