My Advice to a Young Investor – Part 3

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This is the third part of this unintended series on my single biggest advice to a 26-year-old investor.

First, she asked – What advice would I offer to a 26-year-old to do well in her career?

I offered this advice – Play games that you can win.

Then, she asked – How do I know which games to play where I can win?

I offered this advice – First, try to answer this question: ‘What do I desire?’ Then, do a few things that you desire to do, maybe 2 or 3, and then gradually you will gravitate towards the number one out of those 2 or 3. Keep learning, keep exploring, and you should find that one game that would become the only that you would like to be in. And once you have found that game you should play, start playing, get better at it over time, and you should win – not against others but along with others who are also playing that game.

Anyways, then she asked – But how do I get over the fear to even start playing the game that I can win?

So here I am, with my advice yet again, this time on dealing with ‘fear’ that stops most people in their tracks, even before they start. And so, most people do not start playing the game they can win and keep playing the one that someone else has designed for them, or the one where someone else is winning.

‘Fear’ is an interesting topic to think and write about, because this is one emotion that generates so many varied thoughts.

We are all fearful, of some things, and many things.

I have never seen an investor, or any person – young or old – who has no fear.

Over the past eleven years of venturing out on my own, I have heard a lot of appreciation from a lot of kind people for the fact that I am living a life of my choice. Most of them say how great a decision I made to quit the rat race and do what I am doing today.

Even I love this for a fact. But then, my hindsight vision tells me how lucky I have been all along the way.

I still remember the fear-factor I was passing through while making the decision to quit and follow my heart. Though it was not just my heart that helped me make the decision, which was also well thought out. My family was extremely supportive, I had no financial liabilities, had almost a couple of years of savings as margin of safety, and knew what I wanted to spend my time on, or the game I wanted to play where I had a decent probability of winning.

There were, of course, a lot of uncertainties. But being an investor and having read the likes of Warren Buffett and Charlie Munger, I knew I had to deal with them instead of freezing out of the fear of the unknown.

I still remember how, eleven years back, fear almost stopped me in my tracks and repeatedly waked me up at night, telling me, “Vishal, quitting your job to start something of your own in this uncertain world will be a disaster! Do not do it!”

Now, as I look back to these years, I have realized one very important thing.

It is that, in life, the issue is not really ‘fear’ but what we do despite it.

We can either get managed by fear, or manage it.

We can either acknowledge fear, or fall into an emotional whirlpool.

We can either accept fear, or pretend that it doesn’t exist at all.

We can either give up, or get up in the face of fear.

Of course, your response to fear will be different than mine, but what will be common between the two of us is fear itself.

Imagine the ostrich that is known to stick its head in the sand when it encounters danger (which is a myth, by the way).

But imagine it does stick its neck in the sand. An onlooker may consider the ostrich’s act as foolish. But what if this is a great way for the ostrich to pause for a moment, enter a period of extreme darkness where it is not diverted by any other thought and so is able to think better how it can deal well with the incoming danger?

In a way, I believe, the ostrich’s way of sticking its neck in the sand for a moment seems a great way to start dealing with fear, of the known and the unknown.

Fear is, after all, an unavoidable part of being ostrich, or human. It is a daily reality.

But is fear our real enemy? I think, no.

We have bigger enemies to face off – like giving up too early, procrastination, laziness, and making excuses to not start something.

Fear is just fear.

Some people mistakenly assume that the courageous person is the one who is not fearful of anything.

Well, let me enlighten you. The person who fears nothing is an idiot (I remember seeing some in MTV Roadies).

And you know what? Fear is what keeps us safe at most times in our lives.

As Charlie Munger says –

All I want to know is where I’m going to die so I’ll never go there.

Only if I am fearful of dying at some place – a business, a stock, a relationship, or anything – I will avoid going there. Better, I will take steps to understand that that place is safe and would not kill me.

So, you still need to be fearful. Fear is not an enigma. But to get over your fears, you need to be courageous. Now, being courageous is not the same as being fearless.

Being courageous as an investor does not to mean going all out and speculating in derivatives and things you do not understand.

Being courageous as an investor is not about borrowing money to invest in stocks you think can multiply your wealth.

Being courageous as an investor simply means you get over your fears and invest your money sensibly. But just do it.

Steve Jobs said this in his remarkable address at Stanford University in 2005 –

Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure – these things just fall away in the face of death, leaving only what is truly important.

Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.

The idea is – be fearful, and then be courageous.

When you are starting out as an investor, or in your career, or looking to make your next decision in life, my advice is to not getting paralysed by fear.

Instead, remember that some amount of fear will keep you out of harm’s way. Then all you need to have is the courage to manage it.

Now, nobody can give you the courage. Even if Gautam Buddha was sitting next to you, he could not give it to you. You must practice it and realize it yourself.

Then, when fear strikes you, you will already know what to do.

Got it, dear young investor? I hope you did.

You have my best wishes.

Now, what’s your next question?