I had never really considered myself an "investor" before. I had an image of a banker type, or someone with money to spare that would start to use that extra cash to invent in things. I never thought I was in any of those categories.
Recently it has become clear to me that I AM an investor. I would even argue that every single one of us are investors.
What do I mean by this? We invest in things every day. We invest time, energy, money, even ourselves into many different things in our lives.
We invest in ourselves (education), other people (partners, kids, friends), even causes (political, social).
If you have even done any reading on investing (which usually centers around the stock market), there is a theme that seems to carry through just about any book on the subject. One of the major rules of investing: Do not get emotionally involved in your investment.
Now while this is very good advise when dealing with the stock market, it is a bit different when you are investing in yourself, another person, your family, etc. It's almost impossible to NOT get emotionally invested when a family member is spirally down into a pit (of which there are many). You put your time, energy, and even money into that investment, many many times, with little hope for a return (the return of that family member to something better).
But we do get emotionally invested in many of these things. We pour our heart and soul into many of these "investments". We see it everyday, people getting married, starting a business, having children, finding a cause that excites us, etc. We devote ourselves to what ever it is, for us, at that time.
Then, something happens. A relationship changes, a business starts to crumble (or never really takes off), a family member moves down a wrong path, or a million other things. Many times, the signs are pretty clear. Heck, sometimes the signs can be screaming in your face, but we don't listen...we have too much invested to walk away. This is a crucial point. This is when things become almost dangerous.
When a decision is made to ride out a bad investment because "I have too much invested in this already" or "I know it will turn around, I just have to be patient", the potential for disaster really starts to grow. Decisions are made not on facts, history, trends, etc, they are made solely on wants, needs and fear. When decisions are based solely on wants, needs, and fear, the potential for gimongous (Yes, I said gimongous) disastrous events grows exponentially.
It doesn't always have to be a gimongous (I plan on using this word a lot, so get used to it) crash, but the potential is there. I have seen it happen around me, and to me quite a bit recently. I have seen RL businesses fail, RL families torn apart, SL relationship go nuclear, all because an investment went bad, and all the signs that were screaming out were ignored, or thought temporary.
Does this mean that we should not be emotionally involved in our investments? Not at all! Many investments actually require emotional involvement. I think we need to try and RECOGNIZE when our investment decisions are based purely on emotions, and when we are ignoring other facts, to our eventual detriment. Maybe we need to ask ourselves some harsh questions more often.
Maybe we need to remove the emotion from an investment, just for a few moments, to see what it looks like without it. Is this even possible? I honestly don't know. I do know, that after an investment has gone completely out, and you THEN look back, it's easy to see where it changed, where certain things SHOULD have been done, or a change in strategy MIGHT have actually lessened the loss, but wasn't done because of the "emotional" investment involved.
I do believe that any "investment" can be analysed from a purely unemotional viewpoint. Should all investment decisions be made this way? I don't think so, but I do think that it can be a healthy and productive part of any investment strategy. This seemingly simple step, might help keep your investment from causing harm, to you and those around you.
So there it is. I am an investor. You are an investor. You just don't know it yet.
Am I a good investor? Probably not yet. But recognizing something..is the first step.
Recently it has become clear to me that I AM an investor. I would even argue that every single one of us are investors.
What do I mean by this? We invest in things every day. We invest time, energy, money, even ourselves into many different things in our lives.
We invest in ourselves (education), other people (partners, kids, friends), even causes (political, social).
If you have even done any reading on investing (which usually centers around the stock market), there is a theme that seems to carry through just about any book on the subject. One of the major rules of investing: Do not get emotionally involved in your investment.
Now while this is very good advise when dealing with the stock market, it is a bit different when you are investing in yourself, another person, your family, etc. It's almost impossible to NOT get emotionally invested when a family member is spirally down into a pit (of which there are many). You put your time, energy, and even money into that investment, many many times, with little hope for a return (the return of that family member to something better).
But we do get emotionally invested in many of these things. We pour our heart and soul into many of these "investments". We see it everyday, people getting married, starting a business, having children, finding a cause that excites us, etc. We devote ourselves to what ever it is, for us, at that time.
Then, something happens. A relationship changes, a business starts to crumble (or never really takes off), a family member moves down a wrong path, or a million other things. Many times, the signs are pretty clear. Heck, sometimes the signs can be screaming in your face, but we don't listen...we have too much invested to walk away. This is a crucial point. This is when things become almost dangerous.
When a decision is made to ride out a bad investment because "I have too much invested in this already" or "I know it will turn around, I just have to be patient", the potential for disaster really starts to grow. Decisions are made not on facts, history, trends, etc, they are made solely on wants, needs and fear. When decisions are based solely on wants, needs, and fear, the potential for gimongous (Yes, I said gimongous) disastrous events grows exponentially.
It doesn't always have to be a gimongous (I plan on using this word a lot, so get used to it) crash, but the potential is there. I have seen it happen around me, and to me quite a bit recently. I have seen RL businesses fail, RL families torn apart, SL relationship go nuclear, all because an investment went bad, and all the signs that were screaming out were ignored, or thought temporary.
Does this mean that we should not be emotionally involved in our investments? Not at all! Many investments actually require emotional involvement. I think we need to try and RECOGNIZE when our investment decisions are based purely on emotions, and when we are ignoring other facts, to our eventual detriment. Maybe we need to ask ourselves some harsh questions more often.
Maybe we need to remove the emotion from an investment, just for a few moments, to see what it looks like without it. Is this even possible? I honestly don't know. I do know, that after an investment has gone completely out, and you THEN look back, it's easy to see where it changed, where certain things SHOULD have been done, or a change in strategy MIGHT have actually lessened the loss, but wasn't done because of the "emotional" investment involved.
I do believe that any "investment" can be analysed from a purely unemotional viewpoint. Should all investment decisions be made this way? I don't think so, but I do think that it can be a healthy and productive part of any investment strategy. This seemingly simple step, might help keep your investment from causing harm, to you and those around you.
So there it is. I am an investor. You are an investor. You just don't know it yet.
Am I a good investor? Probably not yet. But recognizing something..is the first step.
I've learned the hard way lately that hanging onto "investments," no matter what kind just because you have put yourself into it, can only do more harm than good.
Sometimes you have to know when to cut your losses. You take your lessons and anything else gained and you move on, hoping you're all the better for your investment and the lessons learned.
I guess time will tell.
It's a very hard lesson to learn Clem, especially when the harm comes to roost.
I would say looking back is even harder, knowing the mistakes that were made. But it's important, to try and learn from it, so you can move ahead, with a better understanding.
Thanks for the comment.