As much as I enjoy investing, I wouldn’t do it for free. I wouldn’t be willing to do the tedious work of analyzing stocks if it didn’t somehow lead to making substantial money down the line. While there are other ways that investing is rewarding (e.g. talking to good-thinking people, learning what makes the world turn), money is still the main motivation of my investing activities.
In contrast, I’ve been playing sports for free my entire life. You don’t have to pay me a dime to pick up a basketball, kick a soccer ball, or punch a heavy bag. I play sports for the fun of it.
This realization bothered me, even though I’m certain that no one would want to be an investor if money was removed from the equation. Indeed, the point of investing is to build wealth so that I’ll never have to do something I don’t want to do just to survive.
Still, I wondered how I could bridge the gap between my willingness to play sports for free, and my money-centric motivations for investing. In other words, how could I “find the sport” in investing?
Warren Buffett discovered the “sport” in investing when he was young. It’s the reason why he didn’t stop playing the game even though he could have retired at 26. It’s the reason why he made so much money, yet spent so little of it on himself — because it was less about the money and more about the sport. Buffett has, on numerous occassions, compared stock investing to a baseball game where no strikes are called, and he becomes increasingly animated as he describes how you can watch pitch after pitch go by as you wait for the perfect one that’s right in your strike zone.
For a long time I wondered what drove Warren Buffett. Then I realized it was all so simple: he just liked watching the numbers go up.
To Warren Buffett, money was clearly a way to keep score in a never-ending game. Like a bodybuilder experiencing satisfaction from lifting increasingly-heavier weights and watching their muscles develop in the mirror, watching your bank account climb higher and higher can produce a similar feeling. It’s less about the money, and more about knowing that you’ve made progress.
It is a known fact that humans get more satisfaction from seeing themselves make progress towards a goal than actually achieving the goal. When your brain perceives a potential reward, it begins to secrete dopamine so that you’ll move towards the reward. But when you finally get the reward, the dopamine stops. That is, until you find a new reward to chase, and then the process starts all over again.
The difference between people who are able to stick to their weight loss goals and those who can’t is that those who succeed have tied their dopamine system to their weight loss goal. When they eat less or do a workout, their brain releases dopamine because it is aware that those behaviors are tied to their valued goal. Their entire system has locked on to the process of achieving the goal. People who fail to lose weight however, see eating less and exercising as a punishment. They have not yet found a way to link their reward system to their goal.
Ray Bradbury, who was dubbed by the NY Times as “the writer most responsible for bringing modern science fiction into the literary mainstream,” was once asked if he enjoyed writing. He replied, “Yes, it’s obvious that I do. It’s the exquisite joy and madness of my life, and I don’t understand writers who have to work at it. If I had to work at it, I would give it up because I don’t like working. I like to play.”
I realized that having fun was the key. It was up to me to find the perspective that made the game of investing just as enjoyable as the win.
While many traders like to view investing as if it were a game of Texas Hold ‘Em Poker, I prefer to approach investing as if I were solving a mystery, like Sherlock Holmes or L (from the anime, Death Note.)
When I work, I like to imagine that I am an independent detective on a hard case that no one has ever solved before. This little game gives meaning to the frustrating moments where I am having trouble finding a piece of information, or when I’m stretching my brain to its capacity to wrap my head around something complex.
Philip Fisher, the father of growth investing, also seemed to fancy himself as a sort of stock detective too, considering his meticulous scuttlebutt method. In fact, after coming home from work and having dinner with his family, his usual routine was to read library murder mysteries until bedtime.
Philip’s son, Kenneth, who also went on to manage money, described himself as a “wanna-be-kid-sleuth” when he was younger.
The most peculiar trading ritual I’ve come across so far is from micro cap investor and retired real estate appraiser Fred Carach, who wrote in his book, Forty Years A Speculator, that he dresses up as a riverboat gambler, lights up cigars, and sneers at his computer like Clint Eastwood before executing a buy order.
The point is, when you make things fun, you’ll do it more, and when you do it more, you’ll get better than everyone else at it.