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Monday, May 27, 2024

Embracing Loss and Pain, in Life and Investing


Before beginning today’s post, I have a brief announcement to make.

I am organising in-person workshops on Value Investing in –

  • Bengaluru: Sunday, 7th April
  • Mumbai: Sunday, 14th April
  • Dallas (US): Saturday, 27th April
  • New York (US): Saturday, 11th May

If you are in or around these cities and wish to attend, kindly register here.


Embracing Pain, in Life and Investing

I read a newspaper headline recently that called a 1% decline in the stock market a ‘bloodbath’ and narrated how investors had to suffer through the “pain” of losing a small part of their wealth quickly.

It got me thinking about how our perception of pain and loss, especially in investing, has changed over the years. And it reminded me of my own journey with understanding and embracing discomfort.

Years ago, I was the same. Even the smallest setback, in life or in the stock market, felt like a major disaster. I was constantly in denial of pain, preferring to ignore it rather than face it. This fear of pain made me overly cautious, and honestly, I missed out on a lot of opportunities to invest in some great businesses because of it.

One category was companies with a small amount of debt on the balance sheets. Since I have been highly averse to debt, I also avoided companies with even a small amount of debt on their balance sheets. While being uncomfortable with debt has helped me stay safe in my financial life, I realized over time that I was also missing out on some great businesses because of this discomfort.

But then, something clicked. I realized that discomfort and pain, in all their forms, are inevitable. They’re not something to be feared but understood and embraced. This change in perspective didn’t happen overnight. It was a slow process of learning from the best investors in the world and facing challenges head-on instead of shying away from them.

In my personal life, this meant acknowledging difficult emotions and situations instead of sweeping them under the rug. It was tough to face these things head-on, but with each challenge I faced, I found myself growing stronger and more resilient.

And in investing, it meant redefining what a ‘bloodbath’ really was. A 1% or even a 10 or 20% drop in the stock market wasn’t the end of the world. It was a natural part of the investing cycle. I learned to look beyond the short-term pain and focus on long-term gains. I began to see the losses as lessons, each teaching me something valuable about the market and my risk tolerance. I learned to see investing as a way to make money and a journey with ups and downs. Losses were no longer just failures; they were lessons. With each setback, I became more prepared for the next decision.

This journey taught me that increasing our pain threshold – in life and investing – is crucial. It’s not just about enduring discomfort; it’s about embracing it as a part of the growth process. As Kahlil Gibran said, pain, in its own way, breaks the shell that encloses our understanding, allowing us to see things from a new perspective, learn, and evolve.

So, if you’re reading this and thinking about your relationship with pain and discomfort in life and investing, know that it’s a journey worth taking. Know that it’s okay to feel overwhelmed at times. It’s okay to be scared. What’s important is that you don’t let that fear hold you back. You embrace the pain, learn from it, and let it guide you to a stronger, wiser you.

As Jeremy Bentham, an 18th century philosopher, famously asked…

The question is not ‘can you reason?’ or ‘can you talk?’ but ‘can you suffer?’

If you can suffer amidst the pain and discomfort that life and the stock market may force upon you occasionally, you may not end up with a lot of riches…but a peaceful life.

What else do you want?

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