Chopping Wood and Carrying Water
For six months last year, Megan and I lived in two cabins in the deep woods of the Appalachian Mountains. It was just us, curious deer, loud chipmunks, and an orchestra of birds with an occasional snake, lizard, or an oversized beetle. Many of our friends were worried about us, but we loved every minute of it. My regular routine entailed getting wood for the fireplace and bringing up 5-gallon water bottles uphill. Apparently, chopping wood and carrying water is also an old practice discussed in Zen Buddhist teachings.
This new routine, though, made me think of investing. Many get into it because of a promise of big wins with no effort. They search for quick thrills and easy wins. To them, investing may feel like a lucky coin toss; to us, it feels more like chopping wood and carrying water – we are working with a goal of compounding wealth over the long run, one day, one stock, one win at a time.
Having left the comfort and the convenience of a city apartment, I felt a stark difference between our forest living and what our life used to look like. Many of you have only seen me wear a suit and can’t picture me in a forest setting. Some of you probably already know that last year I took many calls from my hammock up on a hill among the trees with birds singing in the background. I had someone ask if those sounds are real, followed by a comment on how nice and calming they were.
When we moved to the woods, my dad told me that I’m reliving my childhood, and he had a point. I spent summers in our lake house roaming the woods with my dog. It might have been a while, but I’m no stranger to chopping wood and carrying water. I planted trees, and I even helped dig a well in my previous life. Now that I think about it, I wonder if my investor education in patience, persistence, and lifelong disciplined practice started in university halls or back in the deep woods, exactly where I found myself all over again in the midst of the pandemic.
When I read about the new wave of investors joining the market these days, I’m a little worried – not for me, for us, but them. I’m all for everyone becoming an investor. In my talks, I often say – “it’s your world out there; why not own a piece of it, no matter how small.” The new market enthusiasts, as media labels them, seem to often come with big expectations, a short attention span, and an investment horizon counted in hours or days. I believe that approach resembles more a coin toss where luck is the only thing that matters.
I’d say that buying stocks has never been easier while investing has never been more challenging.
With an app and a brokerage account, and almost any amount of money, almost anyone can buy and sell stocks from almost anywhere, including a basement, a couch, or a hammock, for that matter. The speed is mindboggling, too. Such a market enthusiast can enter and exit any position many times a day with every change of heart. It fattens the brokers’ wallets but most likely doesn’t help the investor.
An app on the phone that looks like a game is conducive to a certain behavior, in my opinion. Players, because it’s hard to call them investors, might easily lose touch with reality. There is even a new term for it – “gamification of investing.” The experience is built to make users feel like winners with virtual confetti flying on the screen. Apparently, tt makes enthusiasts want to play more and make even bigger bets. Eventually, small losses can quickly turn into insurmountable losses.
Why has investing never been harder? We’ve never had more distractions, more noise, more information to sift through. It’s never been easier to feel the dreaded fear of missing out. J.P. Morgan, the legendary banker, famously said: “Nothing so undermines your financial judgment as the sight of your neighbor getting rich.”
Patience, focus, the discipline has never been harder to develop and nurture. A few years ago, I gave a talk to a group of investors in Zurich; I titled it: “The need to unplug.” I explained how we consciously have to choose what information we let in and what noise we keep out.
I don’t think that the experience offered by low-cost or no-cost brokers is conducive to patient, long-term investing. I do believe it may require an almost impossible degree of discipline to use those tools to invest rather than play.
Whether it was the six-month stint in the woods last year or my childhood days, I still believe that my seemingly mundane daily routine played a big role in making me a better investor. As a firm, we have at our disposal the tech tools to trade in and out of positions in a heartbeat. We have no virtual confetti flying anywhere, though.
Since our goals and approach focus on the long-term growth of capital, we pride ourselves on trading rarely but with a real purpose. We are intentional and deliberate in our actions. I’d recommend the same to anyone passionate about investing.
Let me be clear, investing is a fascinating pursuit, but it’s not a good place to seek quick thrills and easy wins. It’s intellectually stimulating, financially rewarding, and professionally gratifying. Still, the truth is that the practice of lifelong successful investors looks more like chopping wood and carrying water rather than winning a game or a coin toss.
The information provided in this article represents the opinions of Sicart Associates, LLC (“Sicart”) and is expressed as of the date hereof and is subject to change. Sicart assumes no obligation to update or otherwise revise our opinions or this article. The observations and views expressed herein may be changed by Sicart at any time without notice.
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