Philippe Petit and Art of staying the course!

‘Staying the course’ is one of the most under-appreciated aspect in the realm of investments and its correlation to the returns are least understood among investors today. In the hyper-connected world we live in, and with apps relaying the stock market indices in real-time, distractions aplenty.

Market behaviors are often identified with animals – ‘bulls’ and ‘bears’ are something you hear often; then there are ‘stags’ and ‘wolves’. When the market bounces off the lows, pundits describe it as a ‘dead cat’ bounce. When market roars, we identify it with ‘animal spirits’. Andre’ Kostolany, likened the markets to a ‘dog’ while comparing the economy and the stock market behavior. It is an animal world out there in terms of market behavior and it shows every single day. Fortunately, no one called it a ‘monkey’ business :).

Take a look at the facts about Sensex which shows the perils of not staying the course – if you are out of the market 1% of the time in the last 24 years (5821 days), you would make a zilch in 24 years. It is the same ‘animal spirit’ that gives you jitters all the time, becomes the ‘reason’ for getting 15% CAGR in the last 24 years.  If one is timing the market, or staying in and out over the course of time, what are the odds of skipping these 53 days?  Extremely high.

Sensex-Stat-1991-2015                                      Source: Harish Krishnan (Kotak)

 

It brings us to the high-wire act of Philippe Petit, between the twin towers. That act till today is the ultimate demonstration of triumph of mind over everything.  Art of staying the course is no different in the realm of investments – your mind control over market movements and constant news distraction and how you respond (or the lack of response to be precise) to the market  behavior is a sole determinant of your investment returns and everything else is secondary.

We continue to stress and inculcate this adage – investment makes money but investors don’t as the returns are shaped 99% by the investor behavior and 1% knowledge.

Muthukumar (mk@iaspire4.com)

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1 Response

  1. Mohan says:

    Good article and thanks for the info. BTW, there’s also a money and called Monkey Index 🙂

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