Investing Successfully Is Never Easy

I have noticed that a year is a mite and a decade passes quickly too. I have come to notice that “oldies” music now includes early Brittany Spears songs. That seems wrong. Fifty years is now an easily remembered space. In that regard, yesterday was the 50th anniversary of Atari.

Fifty years of the past is easy enough to remember but fifty years of the future is impossible to understand even though it is a tiny fraction of what is to come.

Do each of us remember hours invested in their early games Pong and Breakout. They are examples of what good game development is about. The factor has come to be known as Bushnell’s Law after Atari co-founder Nolan Bushnell. ” A good game is easy to learn and difficult to master.”

There are other things in our lives where the same easy-to-learn, difficult-to-master rule applies. Some of those easy-to-learn things are not to our advantage. We often ignore the difficult-to-master component.

Investing in the stock market

It is easy to start. You set up an online trading account, transfer some money to it, and order some stock. The first two are the easy part, the last is the part that will eventually demonstrate mastery.

People who have mastered that purchase and sale part of investing will tell you the more they learn the more they discover there is to know. People like Ray Dalio, a founder of Bridgewater Associates, have acquired knowledge dating back centuries. His book, The Changing World Order, describes how the world has developed from the 14th century to now. Did you know the first stock exchange appeared in the Netherlands in 1602? The Dutch East India company was too large for an individual to provide capital. Do you suppose the ability to aggregate many people’s capital helped the Dutch dominate the commercial world of the day?

It was nearly 200 years until the New York Stock Exchange formed, even though the Durch acquired Manhattan in 1626. The economic order changes slowly.

Investing nuance

Ray Dalio is a “macro-investor.” He is not, at least in the beginning, interested in the Price-Earnings ratio of Proctor and Gamble. He is interested in the bigger picture. He is looking for emerging opportunities and then will study the individual businesses there that could outperform. His interest in Chinese business opportunities is more than 40 years old.

Macro investing is not as much about specific transactions as it is about participating in a growing sector. That sector might be a country or an industry. Automobile companies in 1915, radio in 1925, semiconductors in 1968, games and their playing devices in 1972, personal computer and software companies in 1977, and internet-related businesses in 1995.

What is the important sector to study, today? How would you decide? Does it depend on emerging technology, emerging social norms, emerging government control, or possible events? Do the rules change if an event occurs? Some events would affect things adversely, like a nuclear war, the collapse of pollinators, or the Yellowstone supervolcano exploding. Others would be more positive. Personal-sized fusion reactors, artificial intelligence, new antibiotics and viral suppressing drugs, immune system boosters, carbon scrubbers, waste management tools, and a hundred others.

Once you identify a growth sector, you must pick a company to invest in. There the decisions become closer to a gamble. It is extremely difficult to pick a winner out of a collection of startups. If you look back at history, a worthwhile exercise, you’ll find the picking was mostly a guess. Over the years about 1,900 car manufacturers have formed in the United States. How many survived? Not even 1%. It makes betting on horse races look easy. If you had invested in “Radio” in the early days, you would have had many viable picks. Of them, only one became dominant, RCA, and if you bought it in the mid-1920s, it would have been 1954 before you could sell it for as much as you paid for it.

The danger

There are two:

  1. You will miss the macro trend.
  2. You will see the macro opportunity but will misjudge the specific company to acquire. More likely, you will be unable to decide which one, and so do nothing.

A stock market is a place where people must learn to make decisions based on contradictory and incomplete information. Not many of us are capable in that environment.

The defence

Again two:

  1. Spend some time acquiring decision-making skills. The idea of certainty has no place in the real world. Everything is about probabilities.
  2. When circumstances prove your decision was wrong, and most will be, quit. The part that will become most helpful is knowing when to quit. Ideally as early as possible. There is an easy observation. “If I would not buy at this price, I shouldn’t keep it either.” The decision to keep is analytically identical to the decision to buy.

The bits to take away

Do not think investing is easy because it is easy to set up an account and buy and sell stock. The transactions don’t matter, the outcome does, and the outcome is not decided by how well you execute the transactions.

Not knowing what you are doing increases risk.


I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.

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