Will too much pizza make you a bad investor? 🍕
and why marshmallows matter
Happy Friday everyone!
Inflation is popping up left and right, cash holders are about to suffer their greatest losses in decades - and your body mass index can say a lot about your performance as an investor.
If you’re thinking - hmm Alex, I’ve liked you up until now, but this is going too far - hear me out.
After climbing a mountain last Sunday with a professional ballerina who made me realize how LITTLE I know about endurance, strength, and recovery - I got hooked onto the Huberman Lab Podcast (courtesy of my ballerina friend).
If you’re not familiar with Andrew Huberman, I am thrilled for you. You’ve got tons of “ah-ha!” moments ahead of you.
Andrew Huberman is an American neuroscientist and professor of Neurobiology at Stanford.
His podcast is fascinating - because he gives incredibly easy explanations about the link between the mind and the body.
So why am I telling you this?
Because in one of the episodes, Andrew Huberman reveals that the number one cause of obesity is compulsiveness.
In other words, the more compulsive you are, the fatter you’re likely to be.
And this brings us straight to investing.
I’ve said time and time again that psychology is the single most important factor in investing.
And to avoid becoming financially obese, you need to learn to control your impulses.
Your ability to make intelligent decisions - and stick with them over long periods of time despite all the volatility and noise in the world - will define your investment results more than anything else.
Unfortunately, most people don’t know this - which is why the average investor in the stock market massively underperforms the average 7% return of the market (i.e. the return you get by doing nothing).
But it also creates tons of undue stress in life.
Look - the purpose of your investments, and your money, is to create freedom.
Not stress. Not panic. Not obsession. Not status. But freedom.
If you’re worried about your investments every day and checking your portfolio every week (or more) - you’re doing it wrong.
Just like we become obese and nutritionally bankrupt by compulsively eating food without control, we become financially bankrupt by compulsively checking the prices of our investments, greed-buying, and panic-selling.
Warren Buffett famously attributes nearly all of his success to his temperament - not his IQ.
He makes one decision per year and then spends the rest of his time playing bridge.
Of course, financial professionals want to make it seem as if it’s all about smarts - and certainly make you feel like you can’t do it on your own.
That couldn’t be further from the truth.
All you need is emotional control. And if you don’t have it - you can train it, just like you can train yourself to eat less and control your eating compulsions.
I won’t go all philosophical on you, but I’ve become more and more convinced over the years that how you invest is how you manage a lot of other things in your life.
The famous Marshmallow experiment - which showed that kids who could delay gratification became more successful in life - confirms this.
Investing requires emotional fitness and control - and the ability to control the inputs that come at you.
It’s just like saying no to dessert.
But just as you wouldn’t place a warm pizza on your nightstand if you were trying to lose weight, you should adapt your environment and your inputs to help you stay on track with your investments.
It’s incredibly hard to do the right thing in the wrong environment.
The data is clear, however: you are going to be a much better investor if you invest once, and do nothing.
That’s why the price of bitcoin, the S&P 500, or your investment property on any given day doesn’t matter.
By the way - if you’re trying to trade short-term, you’ve already lost.
90% of professional fund managers - with PhDs in maths - can’t do it successfully for long periods of time.
It’s likely you won’t be able to either.
The psychological stress of trading can be borderline unbearable - yet it’s also completely unnecessary.
So don’t worry about the price of bitcoin or your stocks today, tomorrow, in a month.
None of it matters. It’s all just noise that gradually degrades the quality of your life.
Instead, pick great investments and hold them for a very long time.
Train yourself not to check prices, and direct your attention instead to your business, your family, bridge, sports - or the Huberman Lad Podcast - whatever increases the quality of your life.
But stay away from looking at the markets, or your investments.
It took me years to realize this - let alone embody it.
But in a world of abundant information and inputs, clarity of focus is a rare superpower.
Use it wisely.
PS: Here’s the Huberman! 👇