Force for thought — 30.08.24
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 his seminal book, Outliers, Malcolm Gladwell prescribes the following rule: in any endeavour, devote 10,000 hours of practice in order to become skilled. Naturally, this claim has aroused plenty of critical questions. For one, who has 10,000 hours to spare on a new skill? Are all hours created equal? How do we distinguish between the quality and quantity of each practice? And what about preternatural talent? Wherever you land along the lines of Gladwell’s argument, here are two key takeaways to remember. The first is than an inevitable gap always exists between your outset (where your skill level is at the start of your endeavour) and your outcome — and that gap invariably leaves room for sunk costs. The second is that repetitious behaviour begets better results that can minimise said costs, but there’s a caveat: only so long as you channel your practice into the right endeavour.
What does this tell us? While time and talent are finite, repetitive, positive messaging that uplifts investor confidence has a cumulative effect that can reduce the likelihood of incurring sunk costs while strengthening our holdability. To fill the gap between outset and outcome in investing, an optimal mindset is mission-critical. If we exercise our minds routinely — via Force500’s feedback system, focused on positive news — our behaviour is likely to follow suit, upgrading our investor experience. Without the right filler for our gaps in time, knowledge or skill — such as the regular receipt of dividends, versus fluctuations in share price — we may veer off-course sooner than we should, without enjoying the upsides of staying on board for the ride.
To Have on Hand
“Sometimes we need to behave like happy people if we actually want to be happy”. In this New York Times article, clinical psychologist and assistant clinical professor in psychiatry at University of California, Jenny Taitz, illuminates the importance of savouring positive experiences in order to improve our capacities for happiness. If done right, Taitz says we can maximise the quality of our lives — or our investments — so that we can celebrate the peaks but also cope better with the troughs.
