Novak Djokovic and Roger Federer are among the greatest tennis players of all time. They have the best techniques, excellent mental toughness as well as passion for the game. Now, these are the same qualities that a person should possess if he wants to be a very successful investor.
Djokovic has said that he likes “hitting the tennis ball”. In the same way, investors have to love what they do, engage in research and improve their skills day and night. Only with persistent effort can one become an outstanding investor.
Investors shouldn’t try to make quick money through speculative activity. Instead, they need to make long-term plans and have broader vision. There should be clear and simple targets with regard to investment goals.
To get the hang of something as soon as possible is key in sports as well as investment. Sportsmen must have the fortitude and mental strength to recover quickly even if they suffer a big setback. In doing so, they have to find their own style, and overcome internal fears to build self-confidence.
It’s the same in investment. When the market hits a bottom and there is panic among ordinary investors, do you have the confidence to engage in bottom-fishing?
It’s quite normal that everyone has some fears deep inside their hearts. However, we have to get over the fears. After all, sunshine will come after rain.
The deeper the market correction, the more upside there will be in the future. Hence, investors have to build their mental strength to take advantage of panic market selling.
Hong Kong’s benchmark stock index plunged to the 10,700 points level in October and November 2008. At that time, my analysis convinced me that it was a good buying opportunity. Ignoring the extreme fear that was prevalent during the financial crisis, I invested in beaten-down equities, and eventually reaped big rewards. My fund ranked the top of its kind in 2009.
In the first half of this year, things were spectacular in the Hong Kong market, and clients and fund managers were both happy.
However, following a market meltdown in the third quarter, fund managers are now struggling to help clients protect or lock profits. Investors should move on from that painful experience.
Djokovic said that “everything happens for a reason”. The tennis talent was spotted by coach Jelena Gencic, who later became his mentor. In order to make fast and long-term progress in investments, investors should also find their own mentors who can help realize one’s potential.
Investment is a game of psychology. One should have the mental strength to exit at the peak and join at the bottom. If you are overcome by fear and don’t take calculated risks, you won’t go far.
This article appeared in the Hong Kong Economic Journal on Oct. 22.
Translation by Julie Zhu
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