Investing and Learning: Part I

Today, I would like to talk about a major issue for our investments; its importance is such that I have internalised it and seldom verbalise it.

Today I find the opportunity to do it. I am talking about the educational process of the financial market.

As a basic definition, we can state that economics is the study of human relations, connected with the objective of satisfying needs through production and consumption—and what’s between them—of goods and services.

We can also say that finance concerns the study of money flows among agents that constitute an economy, whether they are individuals, companies or governments.

When I studied economy at university, I learnt to understand, from theory, how the satisfaction of necessities works through microeconomics and macroeconomics; I analysed the variables shown and I worked on those spacecrafts that travel outside the experimental field, which are called “theory.”

Yet we were doing something about them. We took the theories, we modeled them, proved them and, by trial and error, we took a step forwards in the understanding of the subject in which we got involved.

When I studied finance at university, I learnt how to understand that huge map called “the money flow;” I learnt how the financing of an individual, company or country works, and then I employed the tools provided by economics to understand the relations between variables and, thus, carry out an analysis regarding the situation to which each company was presented.

However, what I thought to be a great knowledge, after seven years of intensive study, was only the tip of the iceberg. Joining the financial market has been a major test. Learning how to make decisions and assuming the responsibility it implied, was the greatest.

The challenge: learning.

Learning from success and failure, learning from what we call mistakes, when the actual result is different from the one we expected.

Because when I think of the outcome, in the end, I realise there are no such mistakes; all of them represent opportunities to learn, to take advantage of what happened and to make of it an investment in your own course.

During these years, I have made countless good and bad decisions—word that I use only when measuring investments in monetary terms—and it was particularly the bad decisions, the ones that made me lose money, that trained me in the investment exercise.

Below, I will transmit parts of that learning. Synthesising and defining them come in useful to understand what I am talking about. There are many and they certainly won’t fit an editorial column; today I will present three.

Starting by letter “a”, I will list three important learning points when it comes to working in the financial market. Later—in another article—I will come back to this subject, in order to keep on completing the list of my learning through time.

• Adversity. Every time I was faced with adverse circumstances, it was them that forced me to make the effort to overcome the situation. When adversity knocks at the door, it strengthens my working power, my physical and mental strength, and it also helps to increase my willpower. I learnt to take adversity as an opportunity; every time I am faced with an adverse situation, I smile; I get prepared and peacefully walk through it, very attentive to every detail and, at the same time, relaxed with trust and courage. Working in the financial market continuously faces us with adverse situations, and dealing with them and acknowledging the learning they provide are the keys to evolve in the matter. To conclude, I quote Shakespeare “sweet are the uses of adversity which, like the toad, ugly and venomous, wears yet on its head a precious jewel.”

• Alertness. The state of alert, the vigilant attitude, imply being prepared to whatever circumstances arise. If I am not alert, I do not react on time. There is no need to always react immediately; many times the situation allows me to develop a meticulous analysis and considering the process gradually. However, there are also those situations where, making a decision quickly can enable us to make a good use of the opportunity that arises. In order to make that decision, to be ready to act in the short term, we have to remain alert.

• Application. Being diligent in every activity I develop is key to succeed in them. When I work with application, concentration is easy to control; I can focus on the matters I want to deal with; I am aware of every detail; I exploit my working time productively; I take advantage of every opportunity that arises; I precisely distinguish between thoughts; I can choose easily; and I find it easier to make decisions. When I work with application, I have determination and resolve.

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