When someone tells you they're investing in equities for 10 years and more, they're probably not trying to be funny
24-Oct-2015 •Saurin Parikh
Some jokes never get old. For example:
Q: When does a person decide to become a stock broker?
A: When he doesn't have the charisma to become an undertaker.
I read this joke in a Reader's Digest edition some years back, and it never fails to get laughs when I tell it to a group of friends. Until last week, that is, when I told this joke to a group of friends and one of the scowled really hard at me. Probably because he's a stock broker. He didn't find it funny and I can understand why. But that's the thing about humour-one man's food is another man's poison. Not everyone finds the same things to be humourous. And the problem for someone like me, who likes to be funny, is that we never know which joke will bomb or which will fizz out.
Sometimes, what happens is that you get the biggest guffaws from things that are not even meant to be funny. To cite an example, at this very gathering where I told the aforementioned joke, I got more laughs from my friends when I told them that my investment horizon for mutual funds is of 10 years and more. Imagine that! There I was, telling them something important in all seriousness and they act as if I've upstaged Louis CK as the funniest man alive.
But of course, therein is where the problem with most investors lies. They just can't seem to understand the benefits of longevity of their investments. Most people think of themselves as investors, but end up behaving like punters. They can't stay put in their investments for a long period of time. They see a market crash and they panic. They see a market rise and they get giddy with excitement. They try to sell in a crash and they try to buy on a rise, when what they should be doing is exactly the opposite. What they ideally should be doing is nothing; they should just continue with their SIPs, ignoring whatever's happening with the markets.
But as we all know, we're not living ideal lives in ideal worlds. In an ideal world, we wouldn't need money or each one of us would have more than enough to live comfortably with. But since we don't, we have to invest our money logically to make sure we save and allow our savings to grow. And I don't need to tell you that the best way to do that is by thinking long, by staying put and by not laughing at me when I try to tell you about the benefits of saving and compounding.