April 15, 2021•388 words
As first blog post of the main series, I am going to present my reasons for being so devoted to investing. Since I believe that framing is the key to lay solid foundations for a sound investment strategy, so let's start from "why?". It will come to aid in hard times when the market goes against you testing your nerves.
Once you answered this question you can pass to the other ones concerning your investment horizon, risk adversity, ethic, etc...
So why do I actively invest in the stock market?
Short answer: to retire early. Therefore investing is for me an absolute must.
I am not talking about trading in and out at crazy speed with unlikely results. For me investing means accumulating wealth in my broker account little by little as ants gather crumbs in summer in the wake of the winter. As a consequence 1) I tend to save a major part of my salary in order to pile up wealth, 2) I regularly increase or add positions in stocks that have recently drop still preserving their structural integrity.
Experiencing the markets everyday as part of my job is a precious edge since I can leverage my knowledge gathered along my professional life and assimilate the daily news flow. Differently from many other people who are engaging and endorsing the FIRE movement, I am yet not completely bought into the idea of passively investing in index funds even if all the studies about this topic bring valuable arguments to the table. And also I need to justify to myself the meaning of my everyday job! All kidding aside, as far as the markets are unpredictable, a careful and continuous assessment of the macroeconomic environment may offer you precious hints about a prudent equity exposure and sector allocation.
Another compelling side of investing and more particularly of the financial markets is the zero-sum game on which is based on. Warren Buffet once said: "The stock market is a device for transferring money from the impatient to the patient". Most of the active managers and retailers are very demanding from the stock they buy. They often make the irrational decision to close their investment in the worst moment ignoring the basic rule buy low sell high. Taking advantage from these individuals thrills me (I know it sounds perverse).