I think the leangains website coined and popularized this term in the context of weight training more than a decade ago. Ever seen people who religiously hit the gym 3-4 times every week for years, yet struggle to show progress? Do give this post a read if you are into weight training.
I would say fuckarounditis is all too prevalent in many other aspects of life too. Investing, career building, entrepreneurship and relationships included. In every field there are a few core principles that are proven to work across cycles and time frames. In weight training it is all about doing these basics well over years –
- Lift with progressive overload
- Eat a protein dense diet on a calorific surplus or deficit depending on your goal
- Rest to an adequate extent (sleep for 7-8 hrs a day)
If you screw up on any of these three basic factors, you are not going to see the results you want. To do the basics consistently well, you need to have a consistent routine, diet, and lifestyle. If you keep mixing and matching things too often, you will not be able to figure out what is working and what is not. The basis of scientific measurement is to keep other factors steady and to vary one single factor to test the impact on the outcome. The body is no different.
Investing is no different. The best investors do adapt based on experience and new learnings, but they rarely deviate too much from core fundamentals. The core fundamentals of investing well are –
- Understand the businesses you buy, stay away from junk
- Buy at reasonable valuation to maximize the probability of good outcomes
- Have a macro view that allows you to place your investment decisions in the right context
- Have some framework that allows you to get a sense of how the market is thinking about the particular investment or the overall investing environment (Technical analysis, behavioral mindset or any other damn thing that works for you)
- Have a solid risk management framework, learn when to limit losses, correct your mistakes
- Think long term, compounding takes time to make a difference to your life
Every single motivational quote of any investing guru will tie into at least one of these. Glenn McGrath was a great bowler because he would pitch the ball in the right area most of the time. Nadal and Djokovic rarely make unforced errors. This is just the power of discipline at work over years and decades. Doing the basics right over a long period of time sounds easy but is rarely easy to execute well. Muhammad Ali was once asked what was the toughest part of his training routine. His answer was “dodging the nightclub, the parties, the girls and being in the bed by yourself at 9 o’clock at night”. There is a reason why the Oracle of Omaha stays in Omaha and not in NYC. Same damn reason why the best investors do not like to come on TV too often. They all like to minimize distractions and keep their eye on the things that matter most in their craft.
Fuckarounditis has well and truly hit the Indian investing scene big time.
People starts with fundamental investing, get beaten up in a bad run and then hop onto the technical analysis bandwagon. It works for a while when the market texture is in favor, then get beaten up again giving back most of their gains. Over a cycle they struggle to beat FD returns. F&O traders take the easy route of writing OTM options and pocketing the easy premium for months, then give away all of that in 2-3 gap up/down days if their risk management is not good. People spend more time attending webinars and podcasts than to sit down and go through 10 balance sheets or charts every weekend. Attending 30 webinars and podcasts will only give you a dopamine hit, it cannot get real stuff done for you. No one became rich by attending webinars & podcasts alone. People get obsessed with FIRE (Financial Independence and retire early) without realizing that anyone who has attained FIRE did not start with that as the primary objective
People think they can do 10 things well without appreciating that it takes years to do one thing well, leave alone 10 things. You cannot hustle your way to excellence, every hustler who has made it big is excellent at generating social proof out of thin air and swaying people to his/her charisma. They may lack the IQ or judgement but they make up for it somewhere else. The best content comes from people who have real life experiences to tap into, quality insights without real world experience are rare. Yet we see people regurgitating content and trying to build an audience, all in the hopes of monetizing this audience. Getting a real job is much easier and pays better too.
The right choices are always limited in number, uncomplicated and feel boring. Repetition is the mother of any skill, and repetition by construct feels boring. In this information era we just have the illusion of choices because there is a lot of information available on our fingertips. In the previous era the differentiator was to go out of the way and to put in the effort to access the information – hard copy annual reports, building financials models on paper and not on excel, building a physical library of good books.
In today’s era I think the differentiator will be the ability to discard the useless, voluminous stuff and to get to the core things that really matter; as the valuepickr forum says “separate the wheat from the chaff”. If you subscribe to the TL DR motto, you will most likely end up with below average investing outcomes. The good TA folks can quote passages from their study material verbatim even if you were to get them drunk and hang them upside down from the ceiling fan.
At Congruence Advisers we get our full-time analysts to manually extract data points from annual reports and key them into our models. We insist that they read through investor calls transcripts and get to the essence of what is being spoken. Every bloke with an internet connection can access the call transcripts today but very few can derive actionable insights through “speed reading”
Figure out who the folks are who are worth listening to and listen to them alone for a few years.
Read the core principles of any field through generic sources before you decide to follow a particular school of thought. Do not start your fundamental investing journey by idolizing Graham or Buffett, do not start your technical investing journey by idolizing some rockstar trader. I have been doing TA for more than 18 months now and still have not read a single book, all I use so far are basic concepts like price-volume information, relative strength and moving averages. I will get to the advanced concepts once I know how to use the basics well enough.
Be methodical and have a way of tracking the basis for every investment decision you make. If you do not, you will most likely invest in a manner you yourself cannot comprehend after a few months. “Mixing it up” should for those with advanced skills, the rest should stick to systems and processes that reinforce the basics for the first few years.
Whatever approach you choose to go with, try it out across a mini cycle (2-3 years) to get a realistic, objective sense of how suited that style is for you. You will not be able to come to any meaningful conclusions based on a “1 year track record of outperformance”. Keep your persistence and standards high but your ego low.
Get the hell off IG, YT and other platforms that are primarily visual. Nothing wrong with visual content but that should not be all you do. A better way would be to run past annual reports, investor call transcripts, presentations, earnings releases and then listen to what some fund manager has to say about the business. Do not start with the video ever, you will end up gravitating towards the speaker with the most charisma rather than the one with the best investing outcomes.
There is a reason why we have so many young and presentable “financial influencers” today who do not even have 2 Cr invested in equities but make videos on how RJ made his 30,000 odd Crores. You would not ever sign up to a gym where the trainer is 15 Kgs overweight, would you?
More PDF, PPT, word, excel and speaking to industry folks; less of videos, podcasts & telegram channels – this will improve your skills tangibly. More work and less discussion.
For all the networking and discussions that happen between fellow investors, investing is largely a lonely profession that calls for a tremendous amount of independent thinking. I don’t see this changing any time soon.
