Have a Positive Outlook, Take Risks

"Pessimists sound smart. Optimists make money" - Nat Friedman (CEO of GitHub)

 

Investing is really a leap of faith. If someone is looking for problems, they will find plenty of them. There is always a market guru saying crash is imminent, new covid wave is always on its way, 'safe' debt mutual fund schemes sometimes fold-up etc etc etc. The thing is, risks will always be there - we have to learn to embrace them. Risk is a good thing - and this cliche quote by Mark Zuckerberg is an apt introduction to my key idea.

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Let me share three some examples -

1. What if I lose money - A friend of mine is extremely risk averse in life - jobs, friendships everything. I was speaking with him once and realised that from 2011 to 2019 - he kept all his savings in a bank account. It’s not that he is like a Buddhist monk who doesn't care about money - he cares about it a lot. But he was stuck in 8 years of indecision all because of fear of losses.

2. Stock markets is a casino - I will give another example of a doctor in know. She is a risk taker in life - likes to try new things and runs her own clinic. The clinic is very successful and she runs it like a professional CEO. But 90%+ of her savings have been in FDs for the last 10+ years. Why? - because she has developed an aversion towards stock markets. She thinks it’s like a big casino - where gamblers get hooked, the brokers make money and things are sold with misleading claims. She said she will invest in Index funds, only when a recession comes. She has been waiting for a recession since 2007 and it hasn’t come yet. She even missed the opportunity in the Covid crash of early 2020.

3. The world is coming to an end - Nobody is immune from negative mindset, including me. When I used to work with JP Morgan, my job was to analyse gold and coal mining companies in the US. The interesting thing about gold mining industry is that you get to rub shoulders with gold bugs - people who believe a great depression like 1929 is coming because of unprecedented printing of money by central banks. This was back in 2014. The gold bugs were the real deal then, before the Bitcoin maximalists stole their thunder. I even met one person who had stored enough canned food that could last for 6 months in his basement - just in case the imminent crash comes! And these pessimists did sound intelligent to me - I got entangled in the gold bug world and read a lot of articles and books on the topic and shared their negative outlook. I asked my father to sell all of his mutual fund holdings in 2014 - fortunately he didn't listen. The markets have doubled since then!🙈

 

Have a positive outlook, take risks - internalize this mindset change. Yes investing is risky - but this risk is a good thing. Fortune favours the brave - have a positive mindset and believe that good things can happen. This clarity of mind and strong belief is the bedrock on which all your future success in investing will come. And once you truly understand concepts of compounding and inflation, you will realize that not investing is more risky than investing.

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A final note – like me if you are living in India, have faith in the Indian economy. We are a developing country with lot of potential to grow. India’s best is yet to come. The economy will do well in future and the stock market will follow.

 

Note - Franklin Templeton Debt Fund crisis: When and how much money will investors get back - BusinessToday, The Buffet of Canada warns against tech-bubble (moneylife.in)