" A genius is the man who can do the average thing when everyone else around him is losing his mind"
- Napoleon
How often have you experienced anxiety which stems from an exaggerated target return? For most people, the slow and steady approach to investing is a much safer bet versus the over ambitious route. Many times we get influenced by exaggerated claims of success that we see on social media or even within our friends circle.
I guess this issue has become even bigger in this social media driven world as we get bombarded with all sorts of news and information. Even more dangerous are the so called social media influencers supposedly living fancy lives after huge investing success (are they?)
Having fair and reasonable expectations from your investments is a key factor that can make or break your long term success. How we behave and react to the constants noise is a very critical factor. In the investment process, a high IQ is not very important but a strong EQ is. Doing well with money doesn't require a lot of intelligence but it definitely requires a calm and composed mind.
It is a vicious circle. The more you get stimulated by outside noise, the more you tend to up your own ambition. And more you keep pushing yourself harder, the more likely you are to make stupid investment decisions.
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Focusing on average returns can be very rewarding. It eliminates the risk of anxiety and stress of overachieving. It eliminates the poor decisions usually associated with over activity. Very few among us will be as successful as Warren Buffet. Staying focused on average returns is far more important in the long run.
"The line between 'inspiringly bold' and 'foolishly reckless' can be a millimeter thick and only visible in hindsight"
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