Imagine you are on a multi-lane highway, with moderate traffic in all lanes .. and, the lane that you are in starts slowing down. At first, it is just about noticeable, but traffic lanes never maintain a constant speed - they tend to go slower and faster, so you take it in your stride. Your lane slows down further, and further - now, you see cars in the other lanes - particularly, in an adjacent lane zip past you. What do you typically do? You look for a safe opportunity to change lanes, take the appropriate precautions, and move into the fast lane. Obvious, isn't it? We've all done it innumerable times.
Let me now shift our attention to investing. You are holding a stock in your portfolio - how and when you acquired it is immaterial - because, and only because, the stock doesn't know it and neither does it care! Let us even assume that this stock was doing well recently - here, we need to objectively define what "doing well" means - I would define it as "monotonically demonstrating a certain rate of increase in its value." Then, the stock starts slowing down. Its value remains flat. Then, it starts falling - sometimes, like a knife. What does a typical retail investor do? First, (s)he looks at the other stocks growing in value, and consoles her/himself that (s)he is in it for the "long run." "I have studied this stock's financials, and it has to do well." You can see that the investor has already started showing attachment to the stock. This attachment causes the investor to buy more of the slowing down stock. Fall more, buy more! "The pundits have talked about dollar cost averaging. This has to work. In the looooong run."
I am sure the similarities in the traffic and investing examples, as well as the differences are now staring us in our faces. The only reason we don't stick it out in the slow lane, is because we are not attached to it. We readily accept "writing off" the time wasted in the slow lane and reduce the delay of reaching the destination to the extent possible by moving into the fast moving lane.
It is not only in spirituality that Detachment helps ... it matters while driving .. and, also investing!
Let me now shift our attention to investing. You are holding a stock in your portfolio - how and when you acquired it is immaterial - because, and only because, the stock doesn't know it and neither does it care! Let us even assume that this stock was doing well recently - here, we need to objectively define what "doing well" means - I would define it as "monotonically demonstrating a certain rate of increase in its value." Then, the stock starts slowing down. Its value remains flat. Then, it starts falling - sometimes, like a knife. What does a typical retail investor do? First, (s)he looks at the other stocks growing in value, and consoles her/himself that (s)he is in it for the "long run." "I have studied this stock's financials, and it has to do well." You can see that the investor has already started showing attachment to the stock. This attachment causes the investor to buy more of the slowing down stock. Fall more, buy more! "The pundits have talked about dollar cost averaging. This has to work. In the looooong run."
I am sure the similarities in the traffic and investing examples, as well as the differences are now staring us in our faces. The only reason we don't stick it out in the slow lane, is because we are not attached to it. We readily accept "writing off" the time wasted in the slow lane and reduce the delay of reaching the destination to the extent possible by moving into the fast moving lane.
It is not only in spirituality that Detachment helps ... it matters while driving .. and, also investing!
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