Why Good Lovers Make Good Investors

Most people don’t consider themselves investors, and this is probably why most people don’t invest.

But what if we are wrong?

What if we are all investors of sorts, yet we just don’t know it?

The truth is, all of us make investment decisions every day, in numerous areas of our lives.

Some of these are wise and work out in our favour.

Others are less measured and wind up costing us dearly.

In this post, we’ll look at how the patterns people display in relationships can predict the approaches they take to investing.

Along the way we’ll learn about how the battle between two internal identities impacts our financial future. Understanding this battle, is the key to understanding yourself.

Understanding yourself is the key to success in love, and wealth.

Are Love and Money Linked?

It is often said that how you do anything is how you do everything.

As with most clever maxims, there are always exceptions to the rule. However, most also contain kernels of truth.

Most lawyers who deal with the breakdown of a marriages assert that financial stress is one of the leading causes of divorce. Research validates their experience.

If we accept this evidence and the assertions of experts, then the inverse must also be true.

This would mean that those who have less financial stress might generally experience less relationship problems, and therefore be less likely to split.

These couples are likely to enjoy a much richer existence than their counterparts.

Would it not be reasonable then to conclude that the qualities that make someone a good partner, could also give them an edge when it comes to investing?

When I think about those I wish to emulate in relationships, three keystone patterns stand out:

1. They carefully consider their decision

2. They commit for the long haul

3. They continually invest for better or worse

Ironically, the qualities that characterise the successful lover map quite well to those that of the successful investor. In contrast, the ‘player’ displays many parallels with the speculator.

Investors win in the game of wealth.

Speculators ultimately lose.

We are all equal part investor and speculator. Every interaction and transaction is a tug of war between which of these two identities we identify with. The winner determines our economic outcomes.

By analysing the patterns of those who build profitable relationships, we can learn much about profitable investing.

Successful Investors Carefully Consider their Decisions

‘Wise Men say, only fools rush in’ — Elvis Presley

The speculator in each of us is like the desperate romantic caught up in the throes of desire and led by emotion. When the speculator is taking charge, we frequently overlook or ignore the downsides.

Then, when inevitably things get a little more rocky and real, we play the victim.

When we are identifying with the speculator, we are much like the lovesick seeker, forever searching for ‘the one’ (deal, guru, method) which will magically complete us, and make all our dreams come true.

We sacrifice due diligence for intuition, and rarely reflect on our own role in the dramas we create.

Inevitably this means we often fail to learn from our mistakes.

When we choose to empower the investor in each of us, we act very differently.

The investor in all of us makes sure we only commit to a decision after careful deliberation. Like the good lover, we explore our options, and learn about our needs and preferences before doing anything rash.

The investor knows that we don’t need anyone or anything to complete us, we are already whole. This ensures we never make decisions for fear of missing out.

If the investor in us does make a mistake, we don’t internalise the problem.

Instead, we will take time to get some emotional distance. This helps us to look dispassionately at our actions and the outcomes, in order to decide what we might do differently next time.

This helps us to avoid the emotional scarring that can make others hesitant.

Successful Investors Commit for the long haul.

‘If you want to take the island, burn the boats.’ — Julius Caesar

The speculator shares many similarities with the insecure individual who ‘plays the field’ in search of the perfect partner. Despite outward appearances, the ‘player’ doesn’t play to win — they play not to lose.

When we identify with the speculator, we become like the ‘player’ and allow historical heartache to colour our current view.

Doubt prevents commitment, and clouds reasoning, causing us to jump erratically from one option to another. This only ensures we learn little while lining the pockets of the various middlemen who do our bidding.

Ultimately, in both love and money — a string of shallow affairs enriches no one.

In relationships and investing, it’s the transaction costs that kill you. Every time you make a move you it cost you money. These costs add up, and the effect is very often a net loss over time.

Like good lovers, the good investor in all of us is no longer burdened by our baggage. In fact, we are liberated by it.

When listening to our inner investor, we leverage the learning from past oversights, and acquire wisdom to inform our future. This wisdom allows us to move forward in the conviction that we are unlikely to make the same mistakes.

Because of this honest, humble approach, we see every new option as another opportunity to evolve. The more we evolve the more rewarding our life becomes.

Successful Investors Continually Invest for Better or Worse.

‘And I always find — yeah I always find something wrong’ — Kanye West

The perpetual player, like the speculator is always on the lookout for ‘deal breakers’ or ‘red flags’. These clues quickly become catalysts for a rush to the exit in anticipation of a loss.

For the player, an argument is not an argument — its an omen.

For the speculator, repeated quarterly losses signals a severing of ties.

Like the player, the speculator in us overreacts to short-term volatility. When this happens, we make a predictable and critical mental miscalculation.

We conflate the way things are now with the way they will be.

This causes us to overlook a long-term truth the investor never forgets: the market is ultimately only a reflection of human sentiment and endeavour.

While sentiment vacillates violently in response to events and emotions, endeavour remains consistent.

This means that long term, and despite fluctuations — the market only ever goes up.

The successful investor, like our ultimate lover accepts the ups and downs and continues to invest regardless. When we are one with the investor, we are long on faith and short on fear.

This allows us to ride out the storms in the knowledge that although humans are not perfect — we are in some ways predictable. In that sense we are also dependable.

Over time, and with every challenge and crisis faced, the investor in us builds confidence and conviction. This allows us to avoid the one mistake that costs speculators dearly: selling down off assets in response to short term downturn and -in the process — locking in losses.

Ignore the Minutia and Master Your Emotions

Understanding the duality of our psychology is key to overcoming

If you want to become a good investor, focus on cultivating the part of yourself that is a good lover.

The successful investor, like the good lover does three thing very well.

1. Make considered decisions about whom you get into bed with.

2. Deal with your baggage and don’t look over your shoulder.

3. Don’t panic when things get rocky, keep investing for the long term.

If you can manage to master these skills, you will build strong long-lasting relationships, as well as profitable portfolio.