Investing Myth 7 | The Knowledge Myth | Learning about Investing is a Fool’s Game
Hello Intelligent Investor,
Finally, we get to the final Investing Myth, The Knowledge Myth: Learning about Investing is a fools game. Well, before we dive into the meat, you could check the previous Investing myths here:
Why keep money in a savings account when it is just an emergency spending account.
That is absolutely incorrect. The stock market would continue to drive the creation of value in all economies. But also with the occasional bust.
Haha, this is why even PHD holders have fallen in. High unsustainable returns lead to erosion of capital. Avoid at all cost.
A $1 invested in Amazon 22 years ago is above $1000 today. Yes, that is the power of the Long Term, 22 years.
Just as there are no successful lottery winners over the long term, there is nothing like a Jackpot millionaire in investing.
- The Herd Myth: If my buddies are in, I am In.
How did Isaac Newton lose $20,000 in the financial markets, by flouting the Herd Myth.
And now to the seventh myth, the knowledge myth – learning about investing is a fools game. Let’s come for the ride.
Myth 7: The Knowledge Myth
One person quirkily remarked, ‘Ignorance is a caricature of life’.
Many an investor would not take the first check on a stock where they would put their hard earned, blood sweat and tears money. But would spend months researching on the kind of car or the dinner dress to buy.
Isn’t it ludicrous enough that someone would even go into investing just because they want to?
A casual approach guarantess a dismal performance.
Going into investing should be like moving into a profession. It needs to be prepared for.
In school, the principal reminded us that ‘Proper preparation prevents poor performance’.
Conversely, that principle walks perfectly in your investing life.
Investing is a profession and it needs to be treated as such. You must absorb the knowledge that governs that domain.
Arithmophobia – The Fear of Numbers
And the next excuse that comes to most people is: I hate mathematics because of numbers. Numbers are no reason why anyone should fear reading up on Investing. It is as ludicrous as saying, I want to travel but I hate flying. Yes, we hate numbers too. Actually, we don’t, we looveee numbers. But, it is the unit of measurement in this field called Investing. But to put you at ease, let’s be reminded of the quote by the Sage, the Oracle of Omaha, Warren Buffet.
To invest succesfully over a lifetime does not require a statosphetric IQ (mathemagic), unsual business insights or inside information. What is needed is a sound intellectual framework for making decisions and the abilitiy to keep emotions from corroding that framework.
Our aim at invest naira is to provide the framework for investing. You, however, the intelligent investor, must supply the emotional discipline. In as much as investing is a game of numbers, the emotional discipline required to make it a profitable venture can only be supplied by the investor.
The best way to gain emotional discipline is to read the books of the men who have threaded these paths. And pick the necessary lessons from their various bits of wisdom.
Warren Buffet is a classic example. He started reading about investing from the age of 8. He had a father who was a stockbroker. So he read all the books in his father’s office. Some more than once. He thereafter bought his first stock at age 12. And has continued in that game till now. When he was introduced to his mentor, Benjamin Graham, he read his book, the intelligent investor, to stupor.
Mr Buffet would quote verbatim portions of Mr Graham’s book. He was the first student in Mr Graham’s class to have an A in the investing course taught by Mr Graham. Today, he is known to spend hours (over eight) reading. He didn’t own a computer until recently and his global empire has 360,000 employees but less than 30 head-office staff. No algorithm. No sophistication. No brains. Just books. Books and more Books.
He has been writing annual shareholders letters since 1957 to his shareholders. It is full of wit for an aspiring investor.
In as much as we would accept that many people are acro-phobic, people still fly because it enables them to get to places they would otherwise not be able to get to.
Investing is a numbers game but also a mental game. And a good education would help you to put your foot down and understand how it works. It would help you build a framework to investing. If you work to observe all the good stuff you read, you would supply the emotional discipline. If we would take the time to do a good thorough research on the kind of automobile to buy. Then it makes perfect, really great, sense to know stuff about investing. Since that is what guarantees you would ever buy a lamborghini, *winks*
Building an Investor’s Knowledge Arsenal.
The first place to start is obviously by reading all the articles on this site. There is a treasure trove here. Further, there are reels of information available for you on the internet to expand your investing knowledge. Reading an article here and several other sites on investments would be a university education in the school of investment.
Then follow up by reading books. We would recommend our summer reading list article here. Also recommended below is a starters list for a broader perspective.
- The Intelligent Investor by Benjamin Graham
- Reminiscences of a Stock Marketer Operator by Jesse Livermore
- The Snow Ball: Warren Buffet and the Business of Life
And mind you, none of these is numbers or figures or mathematics inclined. There are written in prose style, relatable to any neophyte investor. As you begin to understand your forte, you can take specialized courses on investing and trading that allows you to boil down to the meat of your investing journey. That is, you focus on areas that tickle your fancy while offering a great opportunity to maximise returns. Because investment is a like a sport but with different track and field varieties. However, the principle of investing across the board is rock solid, commonsensical and non-stratospheric-IQ defining.
And when you do this, you are going to Invest Wisely. Which absolutely aligns with our aims at Invest Naira. And the more you know about investing, the better you get at investing. And the faster you compound wealth.
Did you enjoy the series? What about savings or Investment would you want to know more about?
Kindly, drop your comments below and tell us what you think.
6 min read.