It is often said – “ Investing is simple, but it is not easy”.

To achieve investment success, we have to keep things simple, but we end up making things complex. This complexity comes from investor behavior. Investment bubbles, nerve-wrecking falls, media flashing of breaking stories, impatience among investors for a quick buck, etc. are all associated with irrational investor behavior. This irrationality is bad for many but good for some. After all, volatility is a friend of long term and patient investor

Investment success is derived by a well laid out strategy that you develop as per your goals, time horizon, and risk appetite. All you need to do is to stick to your plans, allocate assets accordingly, and re-balance it periodically in an objective manner. But sadly, the way we are, most of us are generally adhoc in our financial lives. Even if we know what is right for us, we give into the pressures by media, social circle, and our own biases. We give into our greed & fear. It is rightly said that the biggest enemy of investor is himself. (Nytimes.com)

We spend too much time in discussing politics and its impact on the economy. The outcome is beyond our control and would not have a meaningful impact in the long run on our investment success. We lose sight of the bigger picture and frequently get lost in irrelevant and uncontrollable details.

During one of the recent investment conferences that I attended, the speaker presented facts about investors’ worldwide. The investors spend more than 90% of their time & energy in predicting the next move of the markets. All this despite their repeated failures with prediction. 95% of all investors continue to BUY high, and SELL low…which is the exact opposite of what they should do to make profits. Counterintuitive…isn’t it! Again, this is not to say that investors don’t have the knowledge about what’s right and what’s wrong for their investment. Putting that into practice is an emotional challenge.

We all are rationale beings. As and when we see seasonal discounts in stores, we see stores flooded with people who are shopping to extract the most value for their buck. But, these rationale beings would do just the opposite when stocks are available at discounts. It is a worldwide phenomenon and equally pronounced in India as well.

So, what should investors actually do to achieve financial success and peace of mind. I think the diagram at the top can explain a lot. 95% of investors spend most of their time and energies in Quadrant I, II and III. Whereas, the secret to success lies in Quadrant IV. If your focus is not on Quadrant IV, you should take action now!