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Friday, March 31, 2017

Getting Beyond Fear

Posted by Tim Stobbs on May 14, 2008

Investing by yourself feels sometimes like an extreme sport. You get a dry feeling in your mouth, your palms get sweating and your mind races. Are you going to win this time or lose? The primary driver of most of these symptoms is fear. Fear of losing, fear of winning and sometimes fear of fear.

So far in my brief investing by myself career I’ve noticed I seem to do better once I have things started. My biggest determent to my money is my own inertia around making changes which when you get right down to it is caused mostly by fear.  I fear making a mistake and losing money as I have done in the past.  I fear making 20% in a year because it will give me all kinds of stupid ideas that doing that should be normal.

Despite all of the above fears I’m still investing and learning.  I don’t pretend to know everything and I would make most people a little nuts by admitting some of my investing decisions have been primarily driven by instinct rather than logic.  Yes I check the numbers on a company before I invest, but sometimes that gut feel is just as right as all the logic in the world (not to mention a gut feel is a much faster way to make a decision when you are pressed for time).

So how do you get passed the fear?  Well the truth is you never do.  It’s short of like giving a speech.  You always have that same fear every time, but you just learn to manage it better the more times you do it.  So as your experience grows you tend to acknowledge the fear, but you don’t let it control your actions.

So in investing I’ve learned that fear is actually not a bad thing.  It gives you a pause to consider something, to run it pass your logic and your emotions and determine what is right for you.  The trick is to not let the pause turn into inertia by staying there too long.

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