The Middle Way Investing

This month has brought me, without doubt, the biggest loss of my entire investing history. Yet it is also the first time I systematically record and analyze my portfolio and performances. This coincidence would have meant a lot to a Chinese, given a strong belief in naturalistic associationism, who will easily blame the loss to the analysis and call it quit. But this is obviously very bad causation thinking.

Still, the question remains: why the loss? and the answer is far from satisfying, because there's more than one factor working here. People naturally prefer unified reasonings over diversified ones. And unless if you're a professional player, you'd probably think building a multifactor model to do the forecasting too complicated and demanding for we ordinary people. I would suggest a middle way between not analyzing at all and modelling professionally, a way which I think works best for most people, still requires some sort of analysis, and has some good byproducts in the long run.

There are many ways of explaining the middle way investing. A popular way is that, you become a better person by accepting the wins and loses indifferently and by focusing on your system instead of your goals. But the "becoming a better person" part of this, to me, sounds too similar to those popular psychology crap to be seriously treated. After all, you can always "become a better person" only in your own eyes, simply by self-suggestion.

I would prefer another way of regarding investing as an effort to understand the market (both material and service), whereas the market is nothing more or less than people's connections based on trade. The modern world is interconnected mainly economically and not culturally nor politically. It is precisely because of this reason that we get to enjoy all those modern facilities our ancients could only dream of while we so take them for granted we barely know they exist. It is also because of this reason that investing has become international to the core, no business can spare itself from global incidents like the still ongoing Ukrainian war or the latest Iranian mess. You can surely focus on one company, one industry, one small part of the US stock market, but your target will suffer with or without your understanding of the global scene, and if you're to be responsible for your wealth, you'd better follow some world news.

Either from a purely risk-averse or a time-saving perspective, focusing on the market level instead of the company level is much better for your life. Individual companies have more risks and require more information to counter the uncertainty. And by looking at markets (stocks, bonds, Asia-Pacific, US, Europe, gold, commodities, etc.) you actually get to know the world and your position in it better. We all live in a specific society, limited by political powers, and connected by economic concerns. We all have a specific role to play in that society we belong, and the society we live in also have a role to play in the global scene, where all the economical, cultural, political factors intertwine and turn into prices at all times. So, by getting better at global investing, you inevitably understand the world better. This, I think, is the true reason why one should do some research when investing. In a sense, the research, the understanding, is the true goal, and the financial gains only byproducts and signals of the process.