“There are only 3 edges in the market.
You can be smarter than everyone else.
You can be luckier than everyone else.
You can be more patient than everyone else.
What’s your edge right here, right now?”
It was a rough week in the stock market. The S&P 500 is down over 13% this week in what is the fastest 10% correction in history. 6 days… it took 6 days for the market to plummet from its top, sparked by fears of a spreading pandemic. I feel I read and listened to every single take on this move in the media, Twitter, blogs, and podcasts. I have consumed charts showing the long-term gains in the stock market, how compounding is the key to success, and how corrections like this happen all the time. But you know what? Even armed with all that knowledge and advice I think it’s still okay to say, “wow, this is rough.”
Self-discipline is vital to success in this world. Ask successful people, what the key to their success is, and more often than not, “self-discipline” is the answer. We live in a world full of distractions. The world feeds on immediate gratification and does not nurture patience. Self-discipline helps you to focus on your goals. It helps you stick to the work you need to get done in order to achieve success. Self-discipline and patience are not easy but they can become habits, just like anything else in this world.
Take me, for example. I am 44-years-old, I am married, and have two children. Now, I have no plans on fully retiring, but perhaps, in 25 years I step away full time from my practice and run a charitable organization or foundation. Even once my income goes away, my wife and I have a good chance of living another 25 years or more beyond that. My time horizon for investing is 50 years. I am invested with that as the goal and I must be disciplined and patient to reach that goal. I can be focused on attaining this goal or I can be focused on the path I use to get there, but I cannot do both. I must be disciplined and patient when reaching my goal and then just ignore the noise around me. I must be the calm in the midst of the storm. I must use my advantage of patience in these markets.
One of the central ideas in the book, “Atomic Habits” by James Clear, is the concept of building “identity-based habits”, which essentially recommends focusing on the type of person you wish to become rather than the outcome you wish to achieve. Take the example of someone who quits smoking. The difference between “I don’t smoke” and “I can’t smoke” is a powerful trainer for the brain. The positive message of “I don’t smoke” is that I have not “given up” anything. I am not sacrificing pleasure. I am investing in my future happiness and well-being. We CAN be patient and disciplined, people!
Returning to my opening quote, there are not too many people who can lay a real claim to being smarter than everyone else. Luck is not a strategy. However, we can be patient when others are restless. We can avoid the up and down cycle of fear and greed. We can focus on attaining our goals and away from the path we use to get there. We can acknowledge it was a rough week and get on with what we can control.
I will leave you with my tips to happiness for the coming weeks:
- Wash your hands frequently.
- Don’t touch your face.
- Stay hydrated.
- Don’t shake hands.
- Be patient.
Have a great week!