Leo Zwiener — Market Insights

I first got interested in investing, thinking the people who spent the most time researching stocks like big corporations like JPM, Goldman Sachs, etc. would naturally do better than everyone else. It makes sense still to this day to me. If you read more and analyze more companies you’d probably get better results you could find the next amazon or find when a company is over or undervalued. This isn’t the entire truth however and I found this out quite quickly. Investing isn’t just about knowledge there are a number of other external factors.

A lot of investors underperform the market and most reasons for this have nothing to do with intelligence. One of the biggest is emotion. This ties back with the phycology of money. It’s easy to feel confident when everything in your portfolio is going up and green. During strong markets, almost everyone feels like they know what they’re doing. Try telling someone who’s up 20% on their positions they have no clue what they’re doing. Then suddenly the market drops, and suddenly people start questioning every decision they’ve made and reminisce on when they should’ve sold.

I’ve noticed that many investors also get too focused on the short term results and I’m guilty of this too. A stock can have a rough few months and still be a great investment years from now and in those months nothing fundamentally could’ve changed. But when people check prices every day, it’s hard not to react to every small move in price action.

Social media defienlty doesn’t help either. Every day there’s a new stock that’s supposedly going to explode, pump and dump, crypto, that is going to change your life. and if not that there is someone showing off a huge gain. What almost never gets posted are the losses and bad trades that happened along the way.

Buying and selling gives the feeling that you’re in control. constantly checking and changing asset allocation most of the time the best decision is to leave your investments alone and let time do the work. I also think a lot of people start investing without a real plan. They know they want to grow their money, that’s it though it’s very broad and without direction. Then when markets get volatile, that lack of direction can lead to impulsive decisions (often selling).

The more I learn about investing, the more I think success comes down to behavior and dealing with emotions. Most investors already know they shouldn’t panic sell or chase whatever is on the hype train. The hard part is sticking to those principles when their real hard earned money is on the line. That’s why I think many investors underperform the market. It’s usually not because they lack information or knowledge . It’s because investing tests your whole brain even when you don’t think about it.