A man can fail many times, but he isn’t a failure until he begins to blame somebody else. John Burroughs
What is the one thing you can do to become an even better investor? This thing is also one of the biggest factors that leave investors powerless when something goes wrong with their investments.
Let me say it bluntly.
It is taking full responsibility for your investment decisions, the winners and the losers. That may sounds like a given to you, but it is not.
Let me explain…
We live in a world where very few people take responsibility for their actions.
It’s always so much easier to blame someone else – the lawyer, the accountant, the media, or the government – than to accept responsibility for your own actions.
We blame violence on computer games and movies, we blame the economic crisis on greedy bankers rather than the homeowner that lied about his income to get the largest home loan possible and we blame obesity on fast food.
Instead of facing up to the real truth (that we have made poor choices in life) we try to find someone or something else to blame.
But getting back to investing.
Excuses for bad investment decisions
When it comes to shifting the blame on investments that have lost money, investors get quite creative, the excuses I have heard would fill a book but here are some of the most common ones:
- The newspaper stock picker column recommended it.
- My financial advisor said it was a sure thing.
- The TV analyst said it was a hot stock.
- My brother made money on it last year.
- IPO’s always make money – this was a scam.
- The blogger wrote it was a no-lose investment
The best one of all is – it’s the government – this law or that regulation – interest rates that increased or decreased.
Very seldom have I heard someone say, I was too greedy, I should have done more research, I should have taken better advice or I should have sold sooner.
The simple truth with any investment you lost money on is…
You lost money because you bought part of a company, the price went down, you sold it and realised the loss. All of the decisions were yours alone. Buying high and selling low is a bad investment strategy. But even worse is buying high and not selling at all.
Many investors adopt this strategy, hoping the price will turn, as they continue to lose money. They just can’t admit that they made a bad investment decision and take responsibility for it.
If you are going to be a successful investor you must take responsibility for all your decisions and you need a well thought-out plan of action if things go wrong.
If you really think about the excuses I have mention you will realise how foolish they are.
In the real world investors are often wrong, the media will hype companies without having all the facts and the central bank will change interest rates.
These are all normal things you as an investor must deal with. Shifting the blame is just an excuse and the easy way out we (me included) take.
As investors we all fight laziness (not looking up the last few facts on a company), procrastination – waiting one more day in case the share price turns around, but instead watching your loss increase even more – and a lot of our other natural traits.
But if you want to be successful you have to simply do what all successful investors do, and accept full responsibility for everything you do.
There is no shortcut.
Let me ask you…
Do you spend more time selecting your next mobile phone than investigating what the best investment fund is with the best long term track record? The one where you will be paying into for the next 20 years?
Do you spend more time deciding where to spend your next 2-week holiday than researching how you will save and invest for your 20-year or more retirement?
Think hard about the choices you are making – or not making – if you answered yes to any of the questions.
The thing is, if you plan or not you will bear the consequences. A problem does not disappear just because you have chosen to ignore it or blame it on someone else.
I know I have been on a bit of a rant here…
But taking full responsibility for all my decisions have made me not just a better investor but also made my life a lot easier.
This is what I am driving at.
Responsibility gives you freedom
If you remember that you, and only you, make and are responsible for all your decisions (investments included).
If you take full responsibility for your decisions you will be able to plan better, be totally focused on learning as much as possible and doing better.
You will be more cynical about that next investment tip and will know where to go for professional help. In the end making your own mind of course.
Take responsibility – with this knowledge comes power – and that’s really the message I want give you.
Once you take responsibility, researching your investments or planning your retirement takes on a different importance; you become more motivated, focused and excited about the task.
And next time you hear – it was the broker, the media, the hot tip you will just smile and know they are fooling themselves.
Your responsible analyst