Fundamental Investing is Truly Ascetic and Frustrating
Introduction: The “Entertainmentization” of Investing
Open social media, and once again, the inhabitants of the “stock community” are fretting over today’s gains and losses, making a huge fuss about selling this and buying that.
Constantly trading day after day and surrendering themselves to the roller coaster of price movements, they appear much like players obsessed with the gacha mechanics of a social game.
However, what a person faces after learning the fundamentals, conducting rigorous screening, and building a portfolio is an overwhelming “silence” that is the exact opposite of that commotion.
In this article, I will explain the “ultimate boredom” one reaches after pursuing solid long-term investing, and the structural reasons for it, by comparing it to RPG commands.
1. If you compare investing to an RPG, the only command you can basically choose is “Defend”
If you map stock investing to game commands, it looks like this.
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Attack: New purchases, adding to positions
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Spell: Various analyses, testing technical methods
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Run: Selling
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Defend: Hold (do nothing)
Extra: Examine: Checking IR news, earnings reports, quarterly reports, etc.
In fundamental investing, once you have gathered your pieces (stocks) in the intended quantities after thorough research, the only command you can basically choose is “Defend”.
This is because, unless the conditions at the time of selection are lost, it is irrational to replace carefully narrowed-down stocks with ones inferior to those already held.
However, cruelly, even while “Defending,” the HP (stock price) of your pieces increases and decreases, and sometimes they fall sharply, chipping away at your mental state.
I think anyone with investment experience has had the experience of being happy when it goes up, only to have it all wiped out.
And choosing the “Attack” (adding to positions) command again only happens in very painful situations, such as when the entire market is in a panic.
In other words, even if you manage to choose a command other than “Defend,” you cannot emotionally enjoy it.
It becomes a highly stressful situation where you take action fearfully, gripped by great anxiety and the feeling that it might drop further.
2. The more “correctly” you invest, the less there is to do
In the early stages of starting to study investing, every time you open a book, new concepts jump out at you, and you can feel the pleasure of gaining experience and leveling up every day.
However, once knowledge becomes second nature and your level has risen significantly, many of the investment books overflowing in the market become known content, and the cost-effectiveness of new study deteriorates rapidly.
In games, strong enemies like Killer Machines or Great Dragons appear as you approach the end, but basically, as your level rises, stronger enemies (higher-difficulty investment books) do not appear.
Since many investment books are written with commercial aspects in mind, not many difficult books targeting a very limited audience are published.
Therefore, even if you read investment books, it feels like you are just defeating slimes and horned rabbits like you were when you first started reading, and the experience bar doesn’t seem to move even a millimeter.
As you continue to learn, your resolution regarding investing increases dramatically, and along with it, your intellectual curiosity swells. Even though the desire to “engage more with the market and enjoy investing” should be significantly higher than that of people with lower resolution, you are forced to suppress those actions.
Your intellectual curiosity about investing and the actions you can take become inversely proportional.
As you level up, you naturally have no choice but to trust the cards in your hand and, other than “Examining” the occasional IR news or quarterly earnings, just keep “Defending” to get through it.
In Dragon Ball, Goku often says, “I get excited when I fight strong guys,” and it is a natural emotion to want to compete and test your skills once you have gained strength.
However, in fundamental investing, you cannot “go fight strong guys.”
Even though I am itching to test my knowledge and compete based on my skills, the state of just continuing to “Defend” and having the portfolio not change for months is, I realize, indescribably boring.
It is, so to speak, the suppression of desire.
For example, I love coffee, and drinking coffee and going to cafes are major pleasures in my life, and I imagine you all have things you love as well.
If you imagine being forced to suppress those things, being unable to go to cafes, or being unable to drink coffee, I think you can understand the “boredom” and “pain” involved.
In things other than investing, if you basically become stronger, there is a place to test your skills.
If it is Go or Shogi, you can test your skills in a match, and the same goes for sports.
Investing is the opposite; that is to say, I strongly feel that being unable to take investment actions is truly tough.
3. The masses who expose their assets to the gamble of luck as the price for “fun”
People who spin gacha and get happy or sad, getting excited about how “investing is fun!”, are entrusting the money that is most important to them after their lives to “chance (luck)” as the price for entertainment.
Because they take such actions, with the exception of the lucky ones among them, their funds are collected as nourishment for the market.
On the other hand, I think the returns that fundamental investors receive are the fruits of having endured “overwhelming boredom” and “asceticism.”
There are no flashy events, nor are there fun commands to choose every turn. All there is, in a quiet room, day after day, is the time spent watching over the backs of the small, elite group of pieces you have chosen, in the silence where almost nothing changes except for the stock price that moves a little bit every day.
You cannot give instructions or even cheer them on.
You suppress the welling desire to do something, and all you can do is look forward to the occasional news or quarterly earnings, and “examine” them.
Conclusion
What is needed to survive in the wilderness called the market is not flashy “attacks” or “spells,” nor is it repeatedly inputting commands at a dizzying pace.
After raising your level by “examining,” what is needed is the power to endure a level of boredom that no one else can stand, and the cold, stoic ability to endure the loneliness of calmly passing the days, day after day, year after year, in a boring routine of “doing nothing.”