Force for thought — 13.09.24

To Have and To Hold

How do you hold onto a good thing and not let it go before it has time to work its magic? By mobilising a method that works. No one is insulated from the challenges of sticking with something promising — not a diet, nor an exercise regimen, or even a first date — the moment it becomes uncomfortable and hard. Why should investing be any different?

We’ve collected more than four million data points that demonstrate how a particular methodological communication enables investors to hold on for the ride. The proof stretches beyond investing: our ability to hold on when we least want to — in order to withstand things that can cause our undoing — has application everywhere. Each week, we’ll show how and why a mechanism for holding on, in investing and in life, is so powerful.

Zooming in

In 2008, professors from four universities conducted a fascinating experiment. Their mission was simple: they set out to determine if an individual’s perception of the steepness of a hill is altered by a psychosocial resource, or in layman’s terms, a friend. What did they find? Their studies revealed the incredible power of a support system. They found that 1) when accompanied by a friend, participants estimated a hill to be less steep than when faced with it alone and 2) even the thought of a friend — versus no one at all — lead them to estimate the same hill to be less steep than when they judged it alone, in isolation.

What does this tell us? It tells us something that is wonderfully simple, but painfully hard for individuals to accept: help helps. Embracing a challenge alone often generates worse outcomes; we already know that the average investor who holds the S&P500 on their own does so for a mere four to six months, usually exiting at a loss of ~2-3%. When we do things alone, we can easily misjudge the steepness of the hill ahead of us. But if we have a support system in place — like Force500’s feedback system, which generates routine, positive and uplifting news — we will be less daunted by the hill we face and much more likely to manage the climb.

To Have on Hand

“How can I improve my middling resilience?” In this New York Times article, Erik Vance illuminates the importance of practising resilience — fleeting as it may feel — in everyday life. The good news? Experts — among them Warren Buffett, who tasks investors with managing their mindsets while he manages their monies — say it can be enhanced, so long as we keep working at it.