Shubhabrata Marmar, acclaimed motorcycle journalist says, when you hurry, “You drive closer to others, choose more dicey gaps, honk more, swear more, accelerate harder and brake later. You become the fool you scream at.”
It is not easy to not be that fool. It is in the nature of most of us to be that way. That begs the question; what makes us hurry? Let us project this thought exercise into the space of trading and investments.
In cricketing parlance, Technical Analysis, in comparison to Fundamental Analysis is often referred to as a Twenty20 match, as opposed to a Test match, which fits better for the latter. The reference is likely to have borne out of the boom-boom, bang-bang nature of the shorter format that the Twenty 20 is, as opposed to the patience required to follow the ebbs and flows of the longer format that a Test match is. So, between the two approaches to understand markets, one appears to be biased towards reacting with urgency. But in reality, prices move when they move, and not as a consequence of the type of analysis used. In fact, price action of fundamentally valued stocks can be equally sharp or look urgent; it is just the waiting period prior to the price move that distinguishes between the two approaches.
Furthermore, reacting with urgency is not just borne out of the situation we are in. We are in fact wired to be so, as our amygdala triggers urgency, whenever something feels important or uncertain. Not starting well also affects our emotional state, that creates guilt, a feeling of being left behind or FOMO (fear of missing out).
Let us borrow some Japanese concepts to string together a set of approaches or actions that can refrain us from acting in a hurry.
Kaizen: Start Small
When you set out to start investing, or when you try a change in an investment pattern, the first step often feels too heavy, weighed down by the potential financial impact, or the feeling of lack of knowledge, or preparedness. Kaizen encourages small steps. Tiny steps that can beat the brain’s resistance. It could mean gradual or systematic boosting of asset allocation, or improving the quality of the portfolio, one stock swap at a time. This aligns with Kaizen’s focus on ongoing process improvement rather than big-bang transformations.
Hara Hachi Bu: Stop at 80%
The idea is to stop eating before feeling full, preventing the chances of overeating. Overeating kills focus, mood, and drive. In investing parlance, being fully invested
leaves no room for more allocation if a dip or a new stock idea emerges. Always keep some excess capital as buffer. On the other end of the spectrum, running your profit till the very end of the target also means that you stand fully exposed to risk of unanticipated market reversals.
Kintsugi: Finish imperfectly
Kintsugi teaches that flaws are not mistakes, but part of progress. Completion builds momentum, not perfection. When you keep working on moving forward, you learn on the go and build confidence. Finish. Modify later. Let the search for the perfect dip not stop you from losing the entry point altogether. Or let the attempt to book large profit, lead to a loss in entire opportunity. Book at reasonable levels and intervals.
Life and investing
Because they blend simplicity, philosophy, self-discipline, and practical action, these Japanese concepts are profound and usable in daily life. Most of these concepts describe something people worldwide struggle with, in terms of purpose, improvement, and balance. Life and investing both follow the same principles. Consistent effort, good habits, smart risk taking, and emotional control are the corner stones of both.
