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Do you have belief?

Posted: Thu Mar 14, 2019 7:00 am
by tennisplyr
They say that successful tennis players have a belief in themselves that when they walk on the court they expect to do well...to win. Do you have belief in your investment knowledge and skills, do you feel that no matter what happens, you will be successful?

Re: Do you have belief?

Posted: Thu Mar 14, 2019 7:11 am
by RickBoglehead
What skills? 3 fund portfolio, with an AA that makes sense, doesn't take any skills. It takes discipline.

Sure, there are some skills involved, which is why many don't do it. But it's not "investment skills".

Re: Do you have belief?

Posted: Thu Mar 14, 2019 7:13 am
by bengal22
tennisplyr wrote:
Thu Mar 14, 2019 7:00 am
They say that successful tennis players have a belief in themselves that when they walk on the court they expect to do well...to win. Do you have belief in your investment skills, do you feel that no matter what happens, you will be successful?
No. How could I feel that?

Re: Do you have belief?

Posted: Thu Mar 14, 2019 7:15 am
by Presintense
I do believe that being more confident than a fairly equal opponent can be a benefit but believing I can beat Serena Williams may be as delusional as thinking my belief has any influence over long-term returns. Since success is an entirely different and subjective measure then if I believe I am successful then I am. Pointless.

Re: Do you have belief?

Posted: Thu Mar 14, 2019 7:25 am
by Dialectical Investor
tennisplyr wrote:
Thu Mar 14, 2019 7:00 am
They say that successful tennis players have a belief in themselves that when they walk on the court they expect to do well...to win. Do you have belief in your investment skills, do you feel that no matter what happens, you will be successful?
If you measure success as having a reasonable strategy and adhering to it, sure. If you measure success as actually reaching a financial goal through investment performance, definitely not. For a passive investor, the primary drivers of investment outcomes are not under the control of the investor. No amount of knowledge, skill, practice, mental acuity, or self-confidence can change that. No body, thing, or force cares about your beliefs or expectations, which are totally irrelevant in every way. Bummer.

Re: Do you have belief?

Posted: Thu Mar 14, 2019 8:01 am
by typical.investor
tennisplyr wrote:
Thu Mar 14, 2019 7:00 am
They say that successful tennis players have a belief in themselves that when they walk on the court they expect to do well...to win. Do you have belief in your investment knowledge and skills, do you feel that no matter what happens, you will be successful?
Of course, all I touch is gold!
We believe there is a simple and powerful explanation for high levels of trading on financial markets: overconfidence. Human beings are overconfident about their abilities, their knowledge, and their future prospects. Odean [1998] shows that overconfident investors—who believe that the precision of their knowledge about the value of a security is greater than it actually is—trade more than rational investors and that doing so lowers their expected utilities. Greater overconfidence leads to greater trading and to lower expected utility.
Apparently this is particularly true among the male side of the species (per research), but by no means would I ever suggest that females couldn't have the trait in abundance or that particular males don't suffer from it.
Psychologists find that in areas such as finance men are more overconfident than women. This difference in overconfidence yields two predictions: men will trade more than women, and the performance of men will be hurt more by excessive trading than the performance of women.

Consistent with the predictions of the overconfidence models, we find that the average turnover rate of common stocks for men is nearly one and a half times that for women. While both men and women reduce their net returns through trading, men do so by 0.94 percentage points more a year than do women.
https://faculty.haas.berkeley.edu/odean ... beboys.pdf

Re: Do you have belief?

Posted: Thu Mar 14, 2019 8:06 am
by marcopolo
tennisplyr wrote:
Thu Mar 14, 2019 7:00 am
They say that successful tennis players have a belief in themselves that when they walk on the court they expect to do well...to win. Do you have belief in your investment knowledge and skills, do you feel that no matter what happens, you will be successful?

I felt that way about my career. I think it helped me be more successful.
I have the same belief about life in general, in that I have been fortunate to have a lot of advantages, and feel well equipped to deal with whatever the future may hold, for good or bad.

But, in investing, I am not even sure i know who the "opponent" is I am playing against. So, I don't really try to use my knowledge and skill to out-smart the markets, i just accept what the market provides and try to utilize my knowledge and skills in other areas to make it all work.

Re: Do you have belief?

Posted: Thu Mar 14, 2019 8:07 am
by bottlecap
I believe that having a belief in yourself could improve your performance in a tennis match.

I do not believe that a believing in myself will have an impact upon the performance on my investments. How could it?

These are two completely different things.

JT

Re: Do you have belief?

Posted: Thu Mar 14, 2019 8:14 am
by JoMoney
I believe if I save more, I will accumulate more than those that don't.
I believe if I make regular investments in a broadly diversified portfolio I will average the returns available in those investments, and avoid the pitfalls inherent of more concentrated portfolios and playing the trading game.
I believe paying lower fees leads to higher returns for the same investments (obviously for the exact same investment, but also for the average and aggregate performance of alternatively weighted/traded portfolios sampled over time).

Re: Do you have belief?

Posted: Thu Mar 14, 2019 8:21 am
by ohai
"do you feel that no matter what happens, you will be successful?"

What jabroni believes this? Can you control disasters, war, or any unexpected stuff like that?

Re: Do you have belief?

Posted: Thu Mar 14, 2019 8:24 am
by The Wizard
JoMoney wrote:
Thu Mar 14, 2019 8:14 am
I believe if I save more, I will accumulate more than those that don't...
Right.
Savings rate (and amount) may be the most significant thing that matters, once you have a low cost custodian, not a shark...

Re: Do you have belief?

Posted: Thu Mar 14, 2019 8:28 am
by Tycoon
Yes, the evidence is overwhelming.

Re: Do you have belief?

Posted: Thu Mar 14, 2019 8:30 am
by IlliniDave
I believe I can be successful. I don't believe my success is guaranteed.

Re: Do you have belief?

Posted: Thu Mar 14, 2019 8:32 am
by goingup
tennisplyr wrote:
Thu Mar 14, 2019 7:00 am
Do you have belief in your investment knowledge and skills, do you feel that no matter what happens, you will be successful?
It is an interesting question to ponder.
I have a belief that the stock market (and index funds) will increase in value over time. I believe we've saved well and have an appropriate mix of stocks and bonds. Overconfidence is a known behavioral pitfall in investing. Mostly, I'm grateful and hopeful. :beer

Re: Do you have belief?

Posted: Thu Mar 14, 2019 8:32 am
by The Wizard
IlliniDave wrote:
Thu Mar 14, 2019 8:30 am
I believe I can be successful. I don't believe my success is guaranteed.
Guarantees are overrated...

Re: Do you have belief?

Posted: Thu Mar 14, 2019 8:33 am
by Independent George
tennisplyr wrote:
Thu Mar 14, 2019 7:00 am
They say that successful tennis players have a belief in themselves that when they walk on the court they expect to do well...to win. Do you have belief in your investment knowledge and skills, do you feel that no matter what happens, you will be successful?
This also happens at the other end of the curve.

Re: Do you have belief?

Posted: Thu Mar 14, 2019 8:35 am
by AerialWombat
In before the lock...

I have belief in my ability to run my businesses. Belief in my ability to maintain a high savings rate. Belief in my rental property selection criteria.

I have zero faith whatsoever in my securities investing “skills”. Thus, I’ve picked a conservative AA, picked a certain course that probably makes sense, and I roll the dice and stay the course.

Re: Do you have belief?

Posted: Thu Mar 14, 2019 8:39 am
by LadyGeek
This thread has run its course and is locked (not a productive discussion). See: Locked Topics
Moderators or site admins may lock a topic (set it so no more replies may be added) when a violation of posting policy has occurred. Occasionally, even if there are no overt violations of posting policy, a topic (or thread) will reach a point where the information content of the discussion has been essentially exhausted and further replies are much more likely to cause distress to the community than add anything of value.