Interns can hit more profits, perhaps by trading cryptos or hot tech stocks…
pain (as opposed to risk and reward) also includes anger.
As I grow older, I am more aware of my pains in investment.
10% loss generates more pains in me than 10% gain can generate happiness.
No pain no gain. I still have 40Y+ to live, so I need to take on some risky assets such as SP500, or Sgp rEstate
k_investor_selfEval
See also
Too broad to be useful? Will focus on my idea of wise investor [mellowing up], which is mostly about 1) breakaway from convention wisdom, or wrong priorities [i] … and 2) risk profile self-discovery.
In addition, 3) Pain is also center stage of becoming “wise”, but behind the scene and less talked about. Various psychological pains [including stressors] are part and parcel of investing. Those pains need to be managed. Unexpected, unmanageable pain can be classified as One special risk.
[i]A wise investor understands that her own priorities [Risk/Pain/Return profile] are subtly unique and invariably different from the stereotypical investors. Therefore, a lot of “other investors’ priorities” are the wrong priorities for her. see also
— risk: over-commitment of personal time… A wise investor recognizes the risk of regrettable ROTI, even with the firewall intact
— risk: infatuated investors .. wise investors understand this tendency in herself
— risk: liquidity risk .. often requires large allocation to low-return assets. See make every dollar work hard4us @@
— other risks not specific to the “wise investor”:
- long-term inflation risk .. See my Nov 2021 mail to Edmund
- personal legal risk .. A wise investor would not lose sight of this risk.
— pain: stressors in eq-investing has a small section on “wise investor”. A wise investor would notice her internal stress sensitivities and work on stress prevention/reduction/protection.
Disambiguation : in this blogpost, “risk” refers mostly to financial risks; mental/health risk is classified as psychological pain.
— pain: firewall .. handles multiple risks and pains that I won’t list.
— pain: missing the boat on some high-growth assets
pain: FOLB by the cohort
— pain: setbacks .. (various types) A wise investor accepts them as facts of life in investing. She could choose to avoid certain assets forever [FXO, commodity futures..] Like R.Xia, she could decide to stand back and watch certain hot assets after losing money. No right or wrong.
— expected return .. if (a big if) and when all risks are understood and under effective monitoring, then the target return is a simpler question.
To reduce risks and pains, for some wise investors (or older investors), risk_capital could be a very small allocation. The smaller this allocation, the less pain/risk. My HY/PE is one example. Therefore, expected return is largely determined by the personal pain/risk profile.
Non-risk capital would go into low-return liquid assets including contingency_reserve. Some wise investors would find the low return painful.
jolt: It’s no shame to allocate 90% to low-return liquid assets.
I want to be an aggressive wise investor, with growing equity portfolio and rEstate portfolio.
jolt: equity portfolio doesn’t have to beat SP500. A wise investor won’t insist on that as a priority.
hot assets .. require a lot of wisdom and cool-headed detachment. Missing the boat is quite common and acceptable.
Q: Is zqbx [working towards higher returns] or passive acceptance of low returns a quality of some wise investors?
Jolt: A: yes to passive acceptance. Investing is not personal improvement, not a noble cause, so I don’t associate it with zqbx. However, I don’t like “lazy” investing. Some due diligence, some PP learning (separate section in this blogpost), some personal growth is part of being a wise investor. It requires effort, focus and dedication, but not zqbx.
— learning .. is a valuable bonus, not always necessary and not always possible.
Jolt: A wise investor may invest in 9 different “things” and learn nothing in depth from half or all of them. Note the different types of learning
— xpSelf has joys from learning and at moments of “short-term”[ii] profits like doses@delight. A wise investor recognizes that. By definition, a wise investor is 100% judged by the rmSelf.. These joys may not be significant to the evaluative rmSelf are are mostly forgotten.
[ii]In contrast, “long-term” profits by definition are very few, and much harder to achieve. For example, I had many joys with Jill’s HY/PE, and FXO, but mostly forgotten. The long-term result seems to be a negative return.
— what experts to trust .. lots of theories make sense but are not really practical. Some academic theories have limited validity — most eq investing theories use U.S. stocks only, with a few (to a few hundred) thousand data points only. They don’t even recognize regime change.
— small number of experiences.. I told Caroline of Propnex that most rEstate investors are not wise because we can’t try too many times, esp. compared to stock investors. After one or a few tries, we are experienced, but not necessarily wise.
Buffett said each person has a punchcard and 20 punches to make, and a few good punches would be enough!
==== some patterns of my bad bets. (I keep this section here as relevant.)
- tx costs.. see https://tanbinvest.dreamhosters.com/18406/3episodes-of-non-recreational-trading/
- non-positive DYOC .. see https://tanbinvest.dreamhosters.com/18406/3episodes-of-non-recreational-trading/
- HY/PE poor transparency or regulation .. But German PE, Dr Soo’s first, E12 .. didn’t fail.
See also ## key variables in my bad/good bets
— eg sReit .. good transparency, highly regulated.
The blue-chip sReits have good bid/ask spread
— eg bccy .. bad bid/ask spread and fees; zero DYOC; poor regulation
— eg (neutral experience) US HY mufu .. real net DYOC was 1-3% considering fees and NAV erosion
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