Investing: 1 Part Grit, 1 Part Magic

I love the markets and I love investing.? Guess this should come as no surprise as I’ve chosen a career in this vocation and have no plans of quitting any time soon.? There is something truly special and magical about investing.? There is a beautiful process that happens, that is hard to articulate properly.? In my experience, I’ve witnessed and gleaned quite a bit of what makes investing (specifically in the markets) such a special thing.? I’ve also had the pleasure of seeing the winning recipe for my most successful investors.

As the title suggests, there are two main ingredients when investing.? The first is true old-fashioned grit.? The other is a little more special and that is the magic of investing.? Let me expound on both of these, so you can see what I’ve borne witness to over the past two-plus decades.

Grit

Grit is such a great word, and candidly a little badass right?? Makes you think of a cowboy or something, but I think it encapsulates so much of what makes for a successful investor.? There are specifically two types of grit I see on a daily basis.? First, is the grit to keep investing constantly.? Markets up? Invest.? Markets down? Invest.? Republican or Democratic president, invest.? Expensive year personally or cheap year, you got it they invest.? Truly successful investors have the grit and determination to invest continually and truly prioritize this part of their financial lives.

The other part of grit worth noting is the grit to stay invested.? It is truly a tough thing to invest and put your faith in the markets when times are tough.? Markets are down 20%... do nothing and hold the line.? Markets up 20%, rinse and repeat.? There is an element of grit and moxy (another badass word) here that it takes to stay the course even when things don’t seem to be working as planned.?

Think about the past two years for instance.? If you invested roughly two years ago you’ve seen those funds go down and up 20% - basically making no money. This can really mess with one's mind and emotions causing those who lack the grit to make irresponsible and irreversibly bad decisions.

In a weird way, those who fare the best during tumultuous times are those who either have immense grit or simply ignore things until calmer seas.? Now although the grit to keep investing and the grit to stay invested are critical to the most successful investors there is another key element at play.

Magic

I hesitate to use the word magic, but simply put this is a critical component of investing success.? There is an old saying that compound interest is the 8th wonder of the world, and by my account that is a fairly accurate description.? In other words, compound interest is simply magical.? Where else can you put money aside and every 7-10 years on average it simply doubles?? I’ve yet to find as reliable and predictable a place as the “markets”.

Here is the rub, however, is they do so not in a straight line.? Sometimes you have to let magic work.? It can be equally as unpredictable as it can be reliable.? I don’t know what the markets will do day to day or year to year, but we do have a fairly good grasp of what they will do over time.? That is both the uniqueness and the mystique of the investing world.

Combo Time

Now here is the key to all of this above, you can’t be successful with one not the other.? Someone with no grit but all the magic, or tons of grit and no magic is destined to fail.? These are the types of investors that get antsy and make the wrong moves at the wrong time.? Or worse yet, they don’t allow the markets to work and abandon them altogether.? As Forrest Gump says about Jenny, they are like peas and carrots they belong together.?

Head my advice if you shall, if you want to be great at investing work on these two disciplines.? Don’t let markets deter your grit, and simply allow the magic to take hold of things.? May not pay off today or tomorrow, but over time you will be very thankful that you did.

As always stay wealthy, healthy, and happy.?