When I ponder the possibility of a deep and prolonged bear market as bad as the last one, my blood pressure rises, my pulse rate ticks up, and I feel a twinge of tension in my shoulders.  At the same time, I feel nauseous when I consider the times that I failed to pull the trigger on buying deeply discounted assets that have tripled in value.

How do successful investors maintain their objectivity in the face of an investment climate that is marked by fear and regret?  Are they apathetic?  Are they stoic?  Or are they adrenaline junkies who constantly crave the thrill of being a high roller?  I think it’s none of the above.

I believe that one of the most important traits shared by successful investors and entrepreneurs is mastery of stress — the kind of stress that would cause most people to be pickled in a jar of anxiety.

In learning how to short circuit stress in investing (and other areas of life), I’ve been observing the behaviors of successful investors and entrepreneurs, not unlike Dian Fossey (Gorillas in the Mist) observing the peculiar mating behaviors of mountain gorillas in Africa.  Over time, I have identified some behavioral adaptations that may prove useful:

  • Successful investors and business founders don’t let tension linger.  When faced with an obstacle, they let out an nasty expletive, pause, take a deep breath, and let go of the tension.
  • Successful investors and entrepreneurs don’t actually strive for perfection. They understand that few things in life demand perfection, so they don’t waste time perfecting things that don’t require perfection or cannot be perfected.
  • Successful investors and entrepreneurs don’t expect others to think well of them all the time.  They feel comfortable saying, “Sorry but I’m going to have to be difficult about this…” and people respect them for it.
  • Successful investors and entrepreneurs don’t feel pressured to take action right away.  They identify those few action items that require urgent attention and schedule a date for future action on less urgent tasks.
  • Successful investors and entrepreneurs don’t naively expect others to behave well.  They acknowledge that most people are pigs.  They know how to politely but firmly express disappointment in bad behavior and then focus on surrounding themselves with trustworthy collaborators.
  • Successful investors and entrepreneurs don’t lament lack of free time to take care of their financial health (or physical health).  Instead, they schedule their free time in advance and use it efficiently.

So in summary, individual investors don’t need to strive for perfection.  When markets are moving against you, swear like a sailor, take a deep breath, and don’t give any thought to what others will think of you.  If you feel too busy to invest your savings, plop all your savings into an all-in-one Vanguard Lifestyle Fund (sailing past the greedy pigs) and focus instead on your income-producing opportunities.

— AK