Updated: Feb 14, 2019
Yesterday morning I woke up to a sea of blood. Blood in the markets that is. My portfolio suffered the biggest single-day drop ever. Fortunately, just five days prior, I had the best day of my investing career. And I can tell you this straight-up. The drop was 10x worse to experience. Maybe part of that sentiment is from recency bias, as I sit here writing amidst the market’s anarchy. But here’s the deal. Without being able to stomach the losses, we’ll never see the gains. To achieve good results, we must endure things that aren’t fun. Whether we’re talking about exercise, dealing with conflict, or investing, this maxim rings true. Making good decisions is not always easy, in fact, it is oftentimes much harder. I once heard a good rule of thumb: Hard choices, easy life. Easy choices, hard life.
The volatility we’re seeing in the markets is not fun, but it’s necessary. It’s necessary because it shakes out the weak hands and forces us to evaluate our conviction. As long as we are focusing on what we can control (acting unemotionally, focusing on businesses, and continuing to learn), the results will take care of themselves. The discipline required for good results isn’t always fun, but it’s necessary.