The Intellectually difficult path:
Investor like warren Buffet,charlie Munger,John Templeton and others have taken intellectually difficult path of beating the market .This path is pursued by those who have a profound understanding of investing,can see future trends clearly and comprehend business and the enviroment.They know that patience is a virtue and therefore take a long term positions.A good knowledge of the field of liberal arts is basic to the development of various investment concepts.Here the name of the game is patience.such investors are always on the lookout for good oppurtunities and bargain prices.As the long term investors,they are willing to wait for them.They have strong belief in their abilites and, since their goal is investing long term for cash flowsas against apital gains.
The physically Difficult path:
Most people are deeply involved in their physically diffiult way of beating the markets.They come early to the office and stay late.They don't know what their children are doing as they don't have time for them.They choose work over the family.They are busy with breakfast meetings,moreon luncheon meetings and even more dinner meetings.Their talks revolve around finding nest best investment oppurtunity to make money.They keep in touch with a number of brokers as they believe it will increase their efficiency in the stock markets.They are overloaded with informations.They are continuosly on calls and receiving more calls though most of time the answering machine takes calls.They continuosly monitors stock price movements.At the office they scan their terminals and the CNBC new for the market movements and at home they keep tabs on the NASDAQ.Market gossips excites them and they make decisions on the basis of rumours.New regarding political developments,monsoon forecasts,inflation figures,chang in minitser's portfolio and GDP growth figures play an important role in their lives .They tend to time the markets on such news.
The physically difficult path is based on assumtions that there are lot of oppurtunites out there and we have to diiging hard to be sucessfull at investing.The curent volatility in the market is the result too many people trying to invest by this method.Life is simple,we make it complicated.
The Emotionally Difficult Path
Most of us may find intellectually and the physically difficults paths too daunting.In that case we would opt for what is called the emotionally difficult path.Actually this path is ver straightforward.simply work out a long term investor policy that is right for us and be commited to it.This is how we can do it:-
When our friends or broker tell us about the great investment oppurtunity and ask us to buy then don't buy.when newspaper report big investment oppurtunities bewary of such news.when our neighbour's tells us how stock market made them rich in few couple of months then don't be tempted.
Emotional discipline is the most diffiult.It is not easy to control against emotion and go against herd.But we need to believe on ourselves and investment policies which we are committed.The emotional difficult path lays stress on the virtue of patience.only the long term approach to investments is only strategy to that can enrich investor and increase the wealth.patience focusses an investor's attention on the goal of compounding money over long period of time.
The emotionally difficult path requires an understanding of how our emotions guide pur decision-making especially when we deal with money.our emotions directly affects our decisions on our investment and expenditure.We have to learn to think our emotions rather than have our emotions do the thinking.
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