I’m beginning to feel increasingly at ease with my bullish outlook, and that worries me.
Of the numerous early indicators critical for avoiding investment disasters, one stands out: comfort. In life, you seek comfort; however, in investing, when you start to feel secure in your views and believe your portfolio is safe, it’s a sign of impending trouble.
When markets move in a familiar pattern that aligns with your expectations, complacency sets in, and you refrain from questioning your assumptions. Bad habits form. Without the anxiety and uneasiness that accompany discomfort, you cease to seek contradictory evidence and opinions. You no longer actively pursue truth.
Investing inherently breeds anxiety by subjecting you to the unpredictable nature of the market. Therefore, when comfort gradually settles in following a stretch of strong returns, you relish it. This lulls you into thinking you have it all figured out. But remember, performance is a lagging indicator, not a leading one.
Your comfort zone is a mentally secure place where you feel less venerable and uncertain. Where you feel you have some control. However, the market is not stable, dependable, or what you would like it to be. So this actually creates behavioral conditions that maximize risk.
This is what you must do, Jawad. Break out of your echo chamber, engage with dissenting opinions, and be open to being challenged. It’s only by pushing through discomfort that intellectual freedom and growth truly flourish.
As Rumi wisely said, “Run from what’s comfortable. Live where you fear to live.”