u/reo_sam

>Professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not those faces which he himself finds prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view. It is not a case of choosing those which, to the best of one’s judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practise the fourth, fifth and higher degrees.

John Maynard Keynes, General Theory of Employment, Interest and Money (1936) pp. 155-156.

I have created a [Survey](https://s.surveyplanet.com/plutom8t).

Even if you have done this in past, it will be fun to repeat it.
I will share the results next week, with the analysis.

In my initial days, months, and years, the participation in equity markets was filled with severe gyrations of fear and greed. The days when the portfolio would go up (green tick), it would give me dopamine hits, life is great, i am great, the world is a happy place. The days when the portfolio would go down (red tick), it would give me depression and anger and frustration, the whole world is a wretched place. All these emotions were destabilizing and disproportionate, and like a person with mania and depression, I would internally feel exactly in sync with the mood of the markets.

With time, this changed. It took a few years for me. I started in February 2007 (so I actually had missed out all the 2003-7 bullrun; didn't have any money to invest) and i think i was reasonably stable after 2011-12.

There is a parable from Zhuangzi:

>Once a student, traveling across a treacherous sea, was amazed at the ferryman's skill who took the boat like a spirit. So he asks how this mastery is possible? The reply - good swimmers adapt quickly because they forget the water. Divers treat water as if they are on land. A capsized boat is like a cart rolled back for them. They are so relaxed in water that they are not affected in whichever way and any number of times their boat can capsize or their cart can roll over. Their hearts are always at ease. And that ease comes from absence of anxiety.

> The Teacher further explains, "when an archer is shooting for nothing, he has all his skill; when he shoots for a brass buckle, he is already nervous; if he shoots for the gold, he goes blind, OR he sees two targets and he is out of his mind." > His skill hasn't changed, but the prize divides him. He cares. He starts thinking more of the prize, than of his skill. And the need to win, drains him of his power.

That was exactly my error. When I was obsessing about the red and green ticks on my portfolio, I was actually focused on the medals. Short-term medals, which didn't have any role in the long term glidepath of the saving-investing plan which I had started. And yet that dominanted by attention for years.

With experience, I was comfortable with being in the markets and stopped getting worried about the gyrations. It is not that my portfolio stopped suffering from bear-phases or flying through the bull phases, but the emotional reactions stopped affecting me internally.

Now when I review or stress-test my plan, I focus on the implicit and explicit assumptions and reasoning (checking valuations, risk tolerance, time horizon, volatility). I still keep a diary which holds my emotional states and reasoning about my plan. Any proposed change in the plan remains in it for 6 months, before I implement (or discard) it. This delay separates the impulses from properly reasoned ideas.

This I see in many other people, who are not aware of these things. Who remain unaware of their plan (if there is one at all). They get distracted by the gold medals and focus on chasing them. The results are hesitation, premature exits, more trading, finding the best plan, best mutual funds, best this, best that, or complete paralysis.

For me, the water is still deep, but it holds no threats anymore.

[Behavioral Bias] The Keynesian Beauty Game - Iteration 2

My Biggest Investing Shift was Emotional, not Analytical - personal lesson