We’ve all seen these situations in real life, and in some cases, actually been in these situations. The Supremely fit Olympic Athlete who cracks under pressure in a competition. The ball player who trains madly for years but freezes in his/her first game. A student who flunks the final test they spent a semester or two preparing for.
What is the universal cause? They did not crack from the external competition & the audience and attention. They cracked from not being able to handle the pressure: basically they psyched themselves out.
What I learned in investing is that the mental game is the critical factor of success. Most of the time you know what you need to do but you don’t due to insecurity, fear or indecisiveness. I learned that psychology accounts for most of investors' mistakes. How many folks sold their stocks back in March 2020 due to fear? I did and boy did it cost me. Loss aversion cognitive bias at work, which ironically caused me even more losses in missing the incredible run up on stock prices.
The best investors are able to manage their psychology incredibly well on a consistent basis. Almost Stoically. To do that, first you must dig in deeply to understand yourself & what drives you . Sometimes it's negative things like fear & shame. The shadow as some folks call it. It goes without saying, I strongly recommend that seeing a therapist or coach will help.
The Process is important. Visualization. Meditation. Journaling. Exercise. All these contribute to improving your mental inner game.
The biggest competition is not with others but with yourself. Once you understand this you will look at life in a very different way.
This all seems simple and obvious but yet how many people actually do these? As Laozi states: “The Easy way seems Hard”