Successful investors don’t get there by accident. As in any endeavour in life, be it business, sport, investing or any other activity, natural “talent” can only get you so far. At some point it becomes necessary to commit to the task at hand and to develop and stick to a plan to achieve success. Successful people have a strong, focused and enduring commitment. This allows them to persevere through setbacks and tough times and to make the sacrifices needed to continue along their journey.
Commitment to this ‘cause’ or journey, generally develops through 4 main stages. We can look at these in the context of an investor making the transition from ‘punter’ – relying on the advice of others, listening to tips and advice from their broker or other 3rd party, and so on – to one with a disciplined plan for engaging the market, and who knows and understands the processes involved in achieving investing success.
This stage generally involves agreeing with the idea or concepts involved. Having had the realisation that their current actions aren’t working, they embark on a fact finding mission of discovery to uncover other ways of investing. This brings them to the use of technical analysis, fundamental analysis, a system or methodology for engaging the market on a consistent basis. At this stage, they begin to become convinced that this must be a better way, but they are not yet committed to the idea.
After a period of research and ‘checking it out’, they make a decision to invest their time and money into their vision. In doing so, they now become more involved in their education process – attending information evenings or courses, maybe even trialing or buying different trading and investing strategies or systems. At this stage, some begin “dabbling” in the markets or cautiously trying their hand by ‘dipping their toe in the water’ with small amounts of money, and/or small trade sizes to see how they feel about this new idea. At this stage, they are still not completely committed, but they are becoming more and more involved.
This is the stage at which a decision is made to step-up and commit to the success plan. It is now that people have become invested in the success of their vision and begin to take responsibility for their decisions and actions. They have given over some time, effort and energy (blood, sweat and tears if you like) to get to this point and can see the benefits of sticking to a proven formula with a long term plan for their success. They have developed an understanding of what is involved and begin to follow the plan unconditionally. Even at this stage though, they may still not be 100% committed.
4. Passionate Enthusiasm.
This is the point when 100% commitment is reached. The benefits of having a strategy, a plan and a vision all come together to create a level of passion and understanding, that was previously lacking. With a true understanding of what can be achieved the investor now has a lasting enthusiasm for the journey, rather than a momentary explosion of hype. Their vision and commitment to the journey now matters to them and has become a significant part of their life and what they do. They now genuinely believe in what they can achieve and what this means to them at a number of different levels.
So, can you identify where you are at in terms of your level of commitment to your investing journey? If so, what do you need to do to get to the next stage and how will all this make you a smarter investor?
Gary Stone writes the Gary Stone Journal.