(with Stephen Moriarty)
Periodic bursts of excitement
It’s been terrific to be able to watch a bit of Test Match cricket on television again over the past week or two, albeit with no assembled crowds to cheer the matches on.
It’s always fascinating when our American friends from over the drink come across cricket for the first time.
The brilliant US writer Bill Bryson once wryly observed how while there might be the occasional burst of activity and excitement, for most of the time very little appeared to be actually happening.
For us cricketing tragics, part of the beauty of the elongated Test Match series is that you can dip in and out of it over the summer, sometimes in a detached manner, yet other times gripped to the action.
While some periods of the game can seemingly require an awful lot of spectator patience, the good parts become all the more rewarding for it.
Punctuated equilibrium
Investing can be a little like punctuated equilibrium, a theory which states that evolution occurs primarily through ‘short bursts of intense speciation’ followed by lengthy periods of stasis, or equilibrium.
In the markets, as they say, there are days when months happen, and months when days happen.
It can be difficult to maintain a constant rhythm when the drumbeat is ever changing.
Sometimes nothing seems to happen for long periods of time.
But this ‘nothingness’ is not useless (as was commonly believed in early evolutionary theory) but provides important information.
And that information is that we know low volatility begets high volatility, and stability creates instability.
The market is our servant not our master, so we need to ensure that we remain vigilant…yet at the same time detached.
Busy doing other stuff
How do you do nothing when there’s nothing to be done?
The simple answer is that you do nothing by doing something else!
Let us explain.
Whether we are doing ‘nothing’ or not depends upon what we believe to be important in our lives.
Sometimes people work for years in a job and think that they’re ‘doing nothing, going nowhere’.
This is obviously not the case, as they still turn up to work every day, but it may feel like it is nothing because it’s not important or valuable to them.
The desired end game is that as you become a systematic investor you may approach the Zen state.
That is, you simply implement our 8 timeless principles in a perpetual manner, without fuss or undue concern.
The outcome is that our desire to make money is somehow reduced (if that is the right word) and the process of evolution takes over.
When you get to this point in your investing journey, there’s comparatively little emotional attachment to it.
Why?
Because you will have experience, and some faith, that the world cycles.
The cycles are somewhat unpredictable – like punctuated equilibrium – but you know that they will come around again.
Patience and process
Sometimes you just have to be patient.
Remember, the market determines the returns on offer.
It’s a metaphor for how much of our life we can control.
We have seemingly gotten used to the idea of control, self-determination, and personal empowerment.
Yet you can clearly see through randomness of the past year how little control of the environment we often actually have.
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