Investing is no different. Without discipline (let me say this as harsh as possible), you are A NOBODY. You can subscribe to the greatest investment newsletters. You can buy a library full of investment books. You can attend every single investment seminar in town. You can probably even buy a $3 million investment system, but in the end, you’ll find that you’re no better than the average Joe Schmoe if you don’t have the courage to discipline yourself. You may have immense amounts of knowledge about “how to” invest, but without that discipline, good luck with your futile attempts to apply that knowledge into decent investment returns.
Thus, your greatest enemy is yourself. Your greatest enemy is the weakness, laziness, and emotions inside you. In order to instill discipline in yourself and fight the “Satan” in you, here’s what you need to realize.
“Be greedy when others are fearful and fearful when others are greedy” is hard. Most investors are the “do as I say, not as I do” kind of preachers.
You’ve probably heard of this from the Buffett PR machine. In fact, almost every single investor preaches this line. But how many are able to talk the talk and walk the walk? The truth is, being greedy when others are fearful is hard.
Most people that preach “buy when others are fearful” end up selling with the crowd when a stock market crash comes along. It is only normal for one to feel fearful during times of market distress, as you are afterall human. But the successful investor conquers his/her’s fearful emotions, and buys into such a great opportunity.
Many also preach that one should “sell when others are greedy”. This is true, as you don’t want to follow the proverbal herd over the cliff and lose your shirt in the ensuing bursting of the bubble. But how many Americans are actually capable of doing what is preached? 99% of investors who preach the “sell when others are greedy” can’t control their own greed, and buy into the bubble, only to get killed in the ensuing bloodbath. It’s natural to feel extreme optimism and greed when the financial markets are rising day after day. But the successful investor controls his/her’s greedy emotions, and sells into the panic.
So instead of spending time preaching "buy when others are fearful and sell when others are greedy", make sure you walk the walk.
Fight your “I don’t want to learn new things.’
Humans have a tendency to be lazy. We dislike learning new things, and prefer to use old methods that we already know to tackle new problems. The problem with is, often times we've lost a good chunk of our investment portfolio by the time we've realized that our old investment strategy doesn't work. A good investor always keeps an open mind, and is constantly on the lookout for an investment strategy that better suits the times than the strategy that they're currently using.
Fight your “I’m not wrong” attitude.
Nobody likes to admit that they're wrong. The reason why George Soros is such a successful investor is because he’s 100% willing to accept the fact that his investment judgement was wrong. 99% of people refuse to admit they're wrong. For example, most people refuse to sell after the bubble has burst, hoping that they're not wrong.
A successful investor is always ready to fight his own stubbornness and “I’m not wrong” attitude.
Fight your “This is too hard. I give up.” attitude.
Yes, we've all been taught since kindergarten that perseverance and persistence is the key to success. Far easier said than done.
This list can go on and on and on……. I think you get the point.