It’s not what happens to you when investing, but how you react that matters

After Charlie Munger, investment guru and Warren Buffett‘s business partner, recently passed away at the age of 99, George Mack told a heart-grabbing story that I was unaware of.

In 1953, at the age of 29, Munger faced a series of devastating events. He got divorced, lost his home and his eight-year-old son Teddy was diagnosed with cancer. He paid for Teddy’s medical expenses and visited him in the hospital every day. Teddy died at the age of nine, leaving Munger broke, divorced and grieving.

Despite these hardships, he persevered and went on to achieve great personal success.

Later in life, when Munger was 52 years old, a failed surgery left him blind in one eye with the potential of going fully blind one day. He was an obsessive learner who read every book he could get his hands on. Confronted with the possibility of going blind and no longer able to read, he said: “It’s time for me to learn braille!” His resilience and determination are a testament to his strength of character and unwavering spirit.

The story of Job is another great example of perseverance in the face of adversity. Job and his family were subjected to a series of severe trials and tribulations. Despite losing all his property, servants and children (according to traditional interpretations), he remained steadfast in his faith.

As a result of his unwavering belief, he, his wife and children were all transformed through the tough times and blessed with more than they had before, and that was followed by a long and fulfilling life. This is a powerful reminder that we can emerge stronger from difficult times if we remain resolute in our belief of a better future.

​Sudden market volatility will unnerve many investors. These are the times that test our ability to withstand unexpected misfortunes. We have three default choices when going through such times, with most of us rarely making it to the third one: we can feel sorry for ourselves; we can blame others; or we can remain steadfast and find a solution.

It’s important to acknowledge our emotions and then focus on finding ways to respond in the best possible manner. As the Greek Stoic philosopher Epictetus famously said in his book the Art of Living, “It’s not what happens to you, but how you react to it that matters.”

Remember, every challenge is an opportunity to learn and grow. This is something I take very seriously in my personal life as well as my responsibilities as a portfolio manager.

Despite difficult markets, we believed in our goals-based strategy and, fortunately, we were able to protect our clients against last year’s large correction, but gave up some of the upside this year for an overall respectable net benefit without the huge ups and downs.

Fortunately, we were able to protect our clients against last year’s large correction, but gave up some of the upside this year for an overall respectable net benefit, but without the huge ups and downs.

We’ve found that minimizing the drawdowns in a portfolio really helps us reduce the negative emotional experience that comes with it, thereby making it easier to stay the course for longer-term rewards.

Focusing on goals-based investing, which involves moving away from benchmarking to an index or what everyone else is doing, is our solution that allows us to react with better decisions providing the opportunity to come out stronger and more resilient than before.