At last, a question that I am genuinely worried about.
Hypothesis: A major cause for modern human misery is finance. A major cause of financial misery is the stock market.
The stock market is posited as something that you have to participate in in order to gain financial security. This was not true in India until about a decade ago. The state offered multiple financial instruments that had rates of interest higher than the year-on-year inflation rate. My parents never invested in the stock market and they are reasonably well-off as far as savings are concerned.
Unfortunately for my generation, deposit rates (~5%) are well below the inflation rate (~7%). Most employers skirt past provident fund. And generally the purchasing power has taken a massive hit over the decades. (Imagine buying a house today LOL)
Maybe we do not have the discipline to work for nearly four decades. We probably lack the patience to sit with a 15-year lock-in period and be satisfied by the single-digit savings rate.
Perhaps our wants have increased.
- We want to retire early, preferably tomorrow.
- We want a 4K TV with a 4K Fire stick streaming 4K Netflix.
- We want to earn 20% return on our investments as soon as possible.
- We want to indulge in the creative arts (meme-ology) instead of sitting at a desk, filling vouchers and printing emails.
Is that too much to ask?
The stock market holds a great deal of influence over my emotional state.
This worries me.
I have spent a considerable amount of time thinking about it and engaging with it over the last two years. My investment strategy has modified every few months. It has currently settled at the altar of The Index™.
Sometimes I trade options because it’s the closest to being a junkie I can get.
I have made considerable profits with it. And then lost them all in a single trade, as you do. These days I am back to being in decent profit. Let’s see for how long.
When I say my mood is affected by the stock market, I don’t mean that it moves up and down with the index. Nah. I am beyond that. I lay my trust in Index ETFs and historically its the most sensible move to make. 1 Plus, the lion’s share (>95%) of my investment is in safer assets than options.
My mood is affected on the days that I trade options. And my god it annoys me to no end that I have little control over it. It’s like the trade has a direct connection to my monkey brain.
Today, I made a trade that netted me a neat 30% profit and I have been really upbeat throughout the day. I mean, there were a bunch of happy occurrences at work, I have been eating healthy and restarted regularly working out, but deep inside I know that I am thrilled to have made a good trade. It’s happened many times before.
And on days when the trade goes south, it’s not like I am absolutely distraught – I just know that I am not in the best of moods. I have learnt to get a handle on it. As in, I know the cause of my disappointment on those days and am able to address it accordingly. Which involves keeping a low profile at work, spending some time indulging in memes and reels, and endlessly scrolling on Twitter.
I guess I am not fully zen yet about this aspect of my investing habit. Yet. But I am getting there.
Here are a few more hypotheses for you to munch on –
- My mood swings with my trades because I have no “strategy”. It’s basically all vibes. If I had a strategy, then I would spend my time re-assessing it and improving it. Each trade would be a learning moment.
- I indulge in options trading because I have nothing else “exciting” going on. Most of you subscribers know me in real life and would probably agree that I am pretty zen about most things. I whine routinely, yes, but that’s part of the process.
- I am (not so) secretly a capitalist hoe. I want moneeeeeeey. For what though? Uber? Oats? Seed mix? Matlab, these are my major expenses in the last six months.
- I am actually a gambler and this is the beginning of my downfall.
What do you think? Email / text for stock tips.
Also, please start investing if you don’t already. Buy ETFs.
In case you’re unaware: Actively picking stocks and trying to time the market is a huge time sink and a sure shot recipe for heartburn. Statistically speaking, passively investing in the index beats nearly every amateur active investor over a timespan of >5 years. ↩︎
Last modified: May 13, 2022