On pretty much every self-improvement or entrepreneurship blog out there, some happy-go-lucky blogger is preaching “do what you love!” or one of the million paraphrased versions of that creed-to-happiness. Recently, there was a story on NY Times about a female baker in New York. Since her youth, she had a love for baking, particularly cupcakes. So she started her own bakery and after 3 years of grinding it out, she quit in disgust (and frustration) and never wanted to touch an oven again.
So that got me thinking about my own profession – is investing really a passion, or is it just a hobby that, when it becomes a career, is more of a burden (like any ole regular job)? After a while of pondering, I believe in the following:
Investing starts out as a job that’s hard to feel passionate about, but all who stay true to the path eventually find joy in this field and just can’t imagine a life without investing.
When You First Start Investing
When all investors start, they do it not mainly out of passion (although there might be a tinge of passion) but out of a desire to profits (in the name of the penny, the dollar, and the Holy Stock Market, Amen!). Sure, there are some enjoyable parts about investing, but if if you enjoyed investing as a hobby (meaning that you didn’t take it too seriously before), the moment it becomes a career perspectives change. Same thing goes for any profession – soccer as a hobby is a lot more fun and “passionate” than soccer as a profession (imagine all the torn ligaments, the 9 hour practices, etc). Investing, when transmorgified from a hobby to a career, all of a sudden encompasses unimaginable difficulties and frustrations that need to be overcome in order to be considered a successful investor. These difficulties far outweigh the aspects that are enjoyable. So why are these hurdles so hard to jump over? Because when you’re new to the game, everything is an uphill battle.
1. The learning curve – Learning what investment strategies work, the basic terminology, the various investment techniques, and a boatload of other stuff – taking all this in is quite a mission (remember what exam time was like back in college? Now compound that misery by a factor of 10.) When I first started investing, taking all this in was quite interesting because I was actually interested in investing (the passion!). However, that passion dissipates the instant one has to APPLY that new-found knowledge. Phase 1 is easy – all you have to do is read and nodd your head up and down like you’re the biggest genius under the sun who understands everything he reads. Phase 2 of the learning curve is the tough part, when you actually have to test out various forms of fundamental analysis, technical indicators, etc and see what things you read actually made sense (and what things are just a bunch of BS). This application part of the learning curve is pretty taxing on the brain, and is extremely boring. So much for passion. Did I like Phase 2? Absolutely not. Was it necessary to my growth as an investor. 110% oui.
2. The lack of funds – When I first began investing with my own money, so did a family friend of mine (at the same time). His dad ran an outsourcing firm with ties to Oriental sweatshops (I know, not the most ethical of guys). Simply put, thanks to parental money he started with a lot more money than I did. “Life ain’t fair, Troy. Get used to it.” my parents would say to me. I get that, but still, it’s pretty disheartening to know that I had to make 10x the returns just to match the nominal returns my friend made (because he started with 10x the capital). Likewise, when any new investor first begins, he/she always faces the lack of money. It takes money to make money, and unless you’re uncle is a very generous tax-evading Greek shipping tycoon, money is the one thing you’re short on despite a surplus of ambition. Hence, this makes investing very difficult for beginners, and this tends to sap much of the passion out of new investors.
However, when you’ve made it to the Big Leagues (meaning success as an investor) things start to change. Investing is no longer “just my job” but soon becomes a passion. You invest not because you want more money, but because you can’t imagine a life without investing.
When You’re Successful
1. Your goals – When you first start investing, what attracts you to this field is the potential for massive profits. Of course, losses would kill the “passion” (or hotheadedness, whatever you want to call it) of new investors. But once you attain a certain level of wealth, what you seek in your investment career changes. For all of those people who had no real passion for this industry, they’ll leave and do something they like, because now they can afford to do that. But for all those who remain, they’re the ones who are truly passionate about this and find enjoyment in investing.
2. The veterans – Investing is also easier to enjoy once you’re successful. Once you get the hang of things & have your investment model all set up, it becomes easy to continue to invest. The hard part is when you first start to learn the ins and outs of the trade by building your model one block at a time. But once your model is all build and is proven to work, it’s just a matter of doing a bit of “maintenance” each day and updating your investment model to better fit the current times.
This was written by a Troy, a fellow financial blogger who writes about money, finance, and investing. Thanks for reading!