Behaviour vs Strategy

Most investors and financial experts focus on strategy. Financial media too focuses on strategy interviewing experts and asking what strategy they use etc.  Investors see all these and think that there is some secret strategy to make money and if we master that it would be great. Instead if we focus on our own behaviour we can succeed in investing better.

Behaviour is within – simply to invest for long term, invest when we have money. Strategy is without. Behaviour in investing is like the retired people we see at morning walks come rain or shine, strategy is about some new exercise or diet fad that we start for a few days after the New year  and then give up. Strategy may be good in theory but not many of us can do 100 pushups and live on oats and energy bars.

Behaviour is common sense – which unfortunately is not very common.  Financial media wants us to keep buying new things New IPOs, new insurance plans, new fund offers. But common sense says that all we need is few good investments be it Mutual Funds or stocks and stick to them for a decade or two. Just as advertisements make us feel bad about the LED tv that we bought last year as the new TVs are OLED or some such thing. So too, we are forced to check our portfolio, throw something out and buy something new to feel better. This works wonders for those who sell us TVs, phones, stocks and new fund offers but not for investors !

Behaviour is simple but not easy. It is actually simple to buy some good funds via SIP / STP and go on about our lives but the easy part will be tested when markets crash as they sometimes do, it wont be easy to see 3 years of nil or negative returns after putting money every month  in but those who stick to this behavior are most likely to succeed than the many strategists. Simple is seldom easy.


So focus on getting behaviour right, strategy will follow. Walking / jogging every day is tough but doable. hitting the gym for a few days and posting the pic on FB sounds cool but most likely will not be followed day after day, which is why gyms charge us annually or give huge discounts on annual fees they know most of us will quit after a week or month!

Investing and building a portfolio bit by bit is tough but doable.

Strategy is helpful of course but behavior is essential.







Leave a Comment