Why invest in common stocks? This question thinly veils the deeper question: why accept the risk? An investor has to balance two basic emotions common in all humans, but potentially devastating to investment activity: Fear & Greed.
The Stoic Investor attempts to pursue his goals with little influence from either fear or greed. Markets will rise and they will fall repeating the cycle several times throughout an investors life. However, these economic cycles, emotionally disturbing as they are, should never have much bearing on the investors decisions made at times of rationality. Taking an overly myopic view on any present set of circumstances is perhaps more damning to an investors success than any other factor I know of.
It is with the above in mind I make the following declaration of intent for my investment activity:
- Slow, consistent maximization of wealth over time through a combination of above average savings rate and acceptable investment return while maximizing the good life in a frugal manner.
- Financial Independence measured by investment activity producing returns capable of covering living expenses and keeping up with inflation.