Do you know the difference between amateur and professional tennis?
Professional tennis is about outplaying your opponent, delivering lightning fast serves and accurately placing the ball through superior play. Amateur tennis, on the other hand, is won by whoever can keep putting the ball over the net. No trick shots, no spin, just avoiding errors. In other words, amateur tennis is a loser’s game – points aren’t won, they’re lost.
That’s a lot like investing. If it requires more than one thing to go right in a row, it’s too hard. If it’s a hail mary long shot, it’s too hard. If you need a degree in quantum mechanics to understand the financial statements, it’s too hard. You don’t win extra points for difficulty.
Our best results have come from simple ideas, patience, and sticking to our process. Minimizing the most common behavioural errors and biases is the easiest way to separate from the pack. You won’t win every shot, but enough to win the game.
What I’ve been reading this week
The difference between real and pretend investors http://mobile.nytimes.com/2016/11/21/your-money/stocks-and-bonds/six-ways-pretend-investors-differ-from-the-real-ones.html?referer=
How often should you be checking your investments? https://www.betterment.com/resources/investment-strategy/behavioral-finance-investing-strategy/high-frequency-monitoring/
Consensus is nearly always wrong http://acquirersmultiple.com/2016/11/the-broad-consensus-of-investors-is-almost-always-wrong-howard-marks/
Good investing is good communicating https://blogs.cfainstitute.org/investor/2016/11/29/the-key-to-great-investing/
Underperformance is unavoidable https://blog.thinknewfound.com/2016/11/outperforming-by-underperforming/