Self-Discovery and Investing

Right now is a moment where fear and the lizard brain can kick into action.

As Adam Smith says…

“If you don’t know who you are, the markets are an expensive place to find out.”

-The Money Game

Managing your own psychology is one of the most difficult aspects of investing, and arguably the most important part for long-term success.

I believe this is not because individual investors have an incredibly hard time managing their individual psychology.

I believe that it is incredibly difficult because we as individual investors are a part of a larger crowd, a market. We are wired to want to be in the group, and not exclude or separate ourselves from the pack. And so we join the wave and often get spit out on the other side.

But it feels so good to be a part of the wave.

And it feels terrible to be outside of it.

Participating in markets means understanding the crowd while existing outside of it.

Doing these two things simultaneously is what’s incredibly difficult.

Why must not we fully merge with the wave?

Because everyone is in a different financial situation and everyone has a different time horizon.

It’s not just that we want different things, it’s that our personal context is not the same. Short term, vs. long term orientation, risk exposure, comfort, desire, fear…

Right now the wave has changed course.

It is easy to once again react, and follow the wave. But knowing the difference between reaction and responsiveness is what you may want to keep top of mind.

Am I reacting or responding?

Reacting is often from fear, a response, from intention. 

The wave may be right in the short term. Or, maybe those who fade the wave will profit. Worse, continuously being washed around is an easy way to drown in confusion.

To find some ground, see if you can root yourself apart from the crowd.

When eyeing a decision, ask yourself:

“What must be done to develop myself or my portfolio for the very long term?”

If there have been losses already cut, try and gain the lesson from them so that the price you paid was not for nothing. 

There are just many dangerous traps along the way in this game. Identifying with the market, with the trades, with the money, being the most pernicious.

Learning who you are allows you to decide when to ride or fade the wave, without getting caught up in it.

That’s the lesson we continually pay the price for.

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XX I’m David Sherry, I coach early-stage founders, invest in crypto, and write on the overlap of investing, crypto, and the creator economy.

You can join my Telegram chat for more real-time notes on what I’m thinking.