Reflections, 12 February 2024
Becoming Antifragile in Stock Investing by Embracing The Volatility
Written by Chris Susanto,
Founder of Re-ThinkWealth.com and VIM
Who is this article for:
Investors with a long-term perspective.
The concept of “Antifragile” is popularized by Nassim Nicholas Taleb in his book that is aptly named “Antifragile”.
What is Antifragile?
Becoming antifragile goes beyond just being strong or resilient.
The core idea is that certain systems actually benefit from disorder, uncertainty and stress.
When we apply the concept of being antifragile to investing or value investing per se, it means that we have to focus on strategies that not only are able to withstand market shocks but profit from them.
Why is Being Antifragile Important?
The stock market can be quite a roller coaster ride, would you agree?
The stock market can even leave the most experienced investors feeling anxious at times.
Volatility is part and parcel of the stock market.
But why do some people profit from chaos while others flee to safety and lose money?
Can we embrace volatility and even thrive on it? Becoming antifragile is a very important mental model to consider.
Here are some of the key principles of antifragility in stock investing:
a. Don’t go all in. While we have stocks in our portfolio, remember we still need cash and lower-risk assets for life’s unforeseen necessities.
b. Exploit volatility. Instead of fleeing and panicking during market downturns, view them as opportunities to buy quality stocks at discounted prices. If history is any guide, every bear market is followed by a bull market. And those who stay invested, often gets rewarded.
c. Know what you are investing. Do your homework before investing in anything. It is, after all, your hard-earned money. Never stop building and improving your investment skills.
d. Focus on optionality. Don’t try to predict the stock market; it is a fool’s errand. Develop strategies allowing us to benefit from multiple potential outcomes and scenarios. One example is investing in companies with many revenue streams and adaptable business models (aka, hard to die!).
e. Embrace a long-term mindset. Being antifragile is not about getting rich fast. It’s about how not to die. It’s about building a portfolio that can weather any storm and emerge stronger over the long term. Be patient and avoid reacting to short-term noises or fluctuations.
Remember, the stock market is inherently unpredictable
By incorporating antifragility, hopefully, we can navigate the volatility of the stock market with greater peace of mind. Turning uncertainty into opportunity.
Ultimately, it is crucial to understand that the biggest risk in investing is ultimately ourselves. Therefore, we need to conduct thorough research before investing in anything.
I will end this article with the famous “Invictus” poem by William Ernest Henley:
Enjoy (:
Disclaimer:
The information provided is for educational and general information purposes only and is not intended to be personalized investment or financial advice. We make no promises as to the accuracy or usefulness of the information we present.
Important: Please read our full disclaimer.
Disclosure:
I/we have no stock, option, or similar derivative position in any of the companies mentioned and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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About the writer
Chris Susanto is the Founder of Re-ThinkWealth.com. He is also a Board Member and Vice Chairman at Bansea and an Independent Director of Bansea Fund 2. Bansea, founded in 2001, is Asia’s oldest angel investment network.
Some of the places where Chris has been invited to speak or has added value as a mentor or writer include Singapore Polytechnic, SMU Institute of Innovation and Entrepreneurship (IIE), Seedly TV, Dollars and Sense, The New Savvy, Value Walk Blog, Investment Moats, NUS Tembusu College, NUS Investment Society, CGS-CIMB Singapore, Singapore Financial Conference by NTU IIC, The Financial Coconut Podcast, Money FM 89.3 and Internationally in Myanmar. He is also a part of the SMU BFI (Business Families Institute) network.
Chris also runs an investment education/coaching business called VIM/Value Investing Mentorship™. If you are interested in building your skills as a value investor, learn more about it here.
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