30 Oct Life is just like the stock market.
If you ask most people what they want in life and I can bet you one (or the only) answer is to be happy. I guess that’s perfectly reasonable, but it’s an oversimplification. We all know life has its ups and downs, and that’s perfectly normal.
Most people’s life looks something like the following drawing. You start at a certain point and then you go up towards happiness, but then your pet hamster Pete dies and you go down towards unhappiness/sadness. Maybe in a week you are getting married to the love of your life and you are way up there, but then later that week you get fired from work for no reason and down you go again. You get the point.
Level of Happiness
I bet everyone would like their life to look like this. Just to be high as fuck on happiness all the time and don’t care about anything. Never going down. Take a closer look at that image though… what does it look like? Well it looks like those machines in the hospital that measure heart rates, but there is no pulse. You’ve flat-lined, you are dead. That’s what life without ups and downs look like. You are most likely dead (and maybe in heaven or however you want to define it).
Level of Happiness
So how the hell does all this relate to the theory that your life is kind of like the stock market. Well, allow me to explain what I mean.
Just like in life, a certain company stock goes up and down in price depending on demand, and guess what? That’s completely normal, but if you want to invest and make profit over the long term you can’t get caught up in these movements. You need to look at the average return over a period of a couple of years. Look at the trend line. The same applies to life. It doesn’t matter that you have ups and downs over the short term, what matters is that the long term trend line is upwards. Incremental improvement over a lifetime. Also, just like in the stock market you need to be patient and consistent with you strategy.
Pitfalls in life and the market
One major pitfall is EGO. If you have a lucky break it’s easy to start believing you are the greatest investor in the world. You might overextend and sooner or later that will cost you. Same thoughts apply to happiness. Ego trips are something that will hold you back over the long term. Especially If you let ego take control you might start attaching happiness to possessions or power.
Don’t get me wrong, a little confidence goes a long way. After all, most people would not be in the market at all if they didn’t have the confidence that they can make profits. But by all means don’t overdo it.
Believing that investing is only for the rich. Just like a lot of people believe that a good and happy life is only for the wealthy. The truth is that anyone can do both, but it requires one to accept responsibility for one’s life. Educate yourself, develop a strategy and start with small steps. Just like you can invest 10 $ in an ETF, you can take the small step of making your bed in the morning or start reading non-fiction.
Not having a strategy or goals. In life and in the stock market you can’t just wander aimlessly. How are you going to achieve success if you don’t know exactly how that looks to you? You need to have specific and concrete goals in both fields if you are to find any success whatsoever. I’m not going to go into detail about goals and strategies, as that’s another deep topic all together. There are plenty of articles on those and you can easily look them up, but here is my short take on the subject.
Your best odds at “winning” in both scenarios is to play the long game. Build a strategy, be consistent and always try to improve.