Investing must sometimes hurt

For me, of course, it’s about investing. And as a stock market investor, it can make you feel very queasy at the moment: War, galloping inflation, scarce raw materials, political hardening on both sides – all that’s missing is a recession. But that is probably only a matter of time. In short, we are confronted with a concentrated load of bad news. Anyone buying shares today in the face of so many negative headlines will have to summon up a considerable amount of courage.

How much nicer last year was when the sky was full of violins. Higher and higher, higher and higher was the motto on the stock markets. Analysts couldn’t keep up with raising their price targets and everything that had a price skyrocketed: meme shares, cryptocurrencies, half a fortune was spent on a non-fungible token on a Pokemon card from Homer Simpson; it was reminiscent of the dotcom bubble. Ah, the good old days when investing was still fun.

But that’s the crux of the matter: when you feel comfortable investing, things almost always go wrong. “Most great investments start with discomfort”, as value investor Howard Marks aptly put it. If you feel really good about an investment because, for example, it is widely accepted that a company is excellently managed, the earnings situation and share price are convincing and the prospects are splendid – then congratulations: you have just identified a share that you should have bought a few years ago. If everyone thinks a share is great, who is going to push the price up any further?

A good investment often feels bad. Do you remember the spring of 2020, when a barrel of oil cost -38 USD for a very short time? Exactly, you were still being paid to take in all the “surplus” oil. Shares in oil companies were demonized and people were almost ashamed to invest in them. The consensus was convinced that the fossil age was over. And two years later, the government was calling for energy savings! Anyone who didn’t let themselves be put off back then and bought energy shares despite their bad feeling is laughing up their sleeve today: Because the only sector that is up this year is the energy sector.

If you want to achieve above-average returns, you have to invest differently to the masses. Even if this is sometimes painful. But it pays off in the long term: even stock market veteran André Kostolany knew: “Stock market profits are pain and suffering. First comes the pain, then the money“.

In this sense: An Indian knows no pain!

Yours, Mark Stock©

Mark Stock is a member of the Point Capital editorial team. “I am a stock market enthusiast and am passionate about economic history. I have been following the ups and downs of the markets for years and, of course, invest myself – preferably in shares. So my name says it all. Every month, I take up what I consider to be an exciting topic. And since the focus is on the content and not on me personally, I write under a pseudonym.”