“What is an article on losing weight doing on an investing blog?” you may wonder.
Now, you asked this despite that you opened this article expecting a real good way to lose weight in seven days. Isn’t it? 🙂
Anyways, you are not alone in this search for a quick fix to your weight issues, for this is what the world is searching on Google when it comes to losing weight…
As you can see, most searches are for losing weight fast and without much hard work – “in a week”, “fast”, “in 7 days”, “in 1 month”…and “without exercise”.
The truth is that, and this is what I have realized, the faster you lose your weight, the faster you regain it.
However, the more gradual the process – regular exercise plus regular control on eating habits – the more sustainable is the weight loss.
Now, how different is it when it comes to investing your money?
It isn’t any different!
Losing weight or earning returns: It’s the process, stupid!
The faster you want results from your investments, the worse-off you are in the long run. However, when you give yourself and your investment time to run, the returns are more sustainable and predictable.
Now when it comes to losing weight gradually, just thirty minutes of moderate exercise at least five times a week works out fine (at least it has done so for me). In fact, as little as 15 minutes of physical activity a day also seems to improve health.
What is more, exercising does not have to be done in a gym nor all at once. In fact, three 10-minute sets are just as beneficial as doing 30 consecutive minutes.
The big idea is to start slowly and to have fun. This prevents injury and increases the likelihood of sticking with the fitness routine.
In investing also, it’s all about starting slow and having fun.
When you stare at the sea of 5,000 listed stocks, you know you can’t swim across. But when you promise yourself that you will stay within your circle of competence , and that automatically removes 98% of these stocks, you know that the task gets much simpler.
Further on, when you know that you have to avoid all companies that do not pass your basic filters of debt-to-equity, or say return on equity , or gross margins, you eliminate 50% of the remaining companies.
At the end of it, you are left with 50 companies out of which you need to find only 20 stocks worth investing over the next 20 years. (Yes, that’s all you need to create wealth from stock investing!)
See, now you have so much time (5-10 years) to research those 20 stocks deeply and buy them when the prices are right.
Easy, isn’t it?
But then, some will say, “Isn’t it painful to wait endlessly for stocks to fall to your valuations?”
Yes, waiting is always painful. Especially in investing, waiting before buying a stock is equally painful as waiting after buying a stock. But then that’s the way real wealth has been created in the stock market.
Of course, the alternative is to flip stocks and hope to make out-sized short-term returns (and then lose it all!).
But as Prof. Sanjay Bakshi wrote in an amazing post on ‘ return per unit of stress ’, it’s a choice you must make how much stress you want to take for one unit of return on your investment.
Like it’s a choice you must make to lose weight fast, which is stressful and unsustainable, or lose weight gradually, which is not stressful and highly sustainable.
After all, it’s not our abilities or gifts which define who we are, but the choices we make in life…whether it’s about losing weight, or earning investment returns.
What do you say?
Nice analogy Vishal 🙂
I have been guilty of trying the fast route to weight loss and stockmarket returns and have seen the consequences of the same.
When you move too fast, there are great chances that you will fall badly.
So thanks a lot for reminding again! Cheers!
Both loosing weight and growing wealth in stock market have another thing in common. Most people know what to do, but very few people can actually go ahead and do it. According to me the factor which makes the difference is DISCIPLINE.
Wonderful analogy. Patience is the key.
But let me assure you with so many articles, books, views and guidelines a lot of folks would be utterly lost.
I met a leading analyst recently and he was mentioning there is so much information that even he finds it very difficult to keep up even though he tracks only a handful of stocks. Although I am sure the company he works for has put processes in place in line with best practices. After all billions are being managed by teams and quiet a few are doing a decent job of managing the investors money.
At the same time I am convinced while good investing is a process for sure, Luck too has a very significant part to play. However, if you follow a process and are disciplined the bad luck would be far and few and you will readily accept it as a part of the game.