Force for thought — 13.12.24

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

Cast your mind back to Odysseus, the warrior and protagonist at the heart of Homer’s Odyssey, which details Odysseus’s journey home to Ithaca after the Trojan War. In his journey, Odysseus is confronted with the Sirens, whose objective is to woo men to their deaths through beautiful song. To resist the Sirens, Odysseus orders his men to tie him to the ship’s mast and row as fast as they can to escape their temptation. It works — but at what cost?

From investing to dieting, there has been much ado about self-control. Studies have explored self-control in limiting terms; testing individual capacities to resist or suppress maladaptive impulses, i.e., to tie ourselves to the ship’s mast in order to avoid danger. But what if we could preserve our energies and maximise self-control not by exercising effortful resistance but by developing positive habits instead? Across six studies, researchers have shown that self-control “is also reliably associated with beneficial habits, those automatic action dispositions forged by repeating a particular behaviour.” Said otherwise: investors don’t have to wrestle daily temptations that threaten to undermine their investment objectives (very challenging) so long as they become attuned to a routine and positive feedback loop — like Force500’s communications system — to moor them to their investments (very doable and very effective). The former will undoubtedly prove an uphill battle with lacklustre results, while the latter can be automised and effortless — maximising the likelihood of success.

To Have on Hand

“The first and greatest victory is to conquer yourself,” says Plato. “To be conquered by yourself is of all things most shameful and vile.” The Ancient Greek philosopher waxed endlessly about the importance of self-control; of developing a mastery over our desires and emotions. Why is this relevant to investor behaviour? Because without self-control, he rightly believed humans were prone to getting in their own way and acting on irrational whims.