5 Frameworks that Shaped my Investing Journey – Basics of the Stock Market

Have you ever felt that the stock market isn’t for you? Or that making money feels far harder than you thought?

If yes, you’re not alone.

In this piece, I will share four simple frameworks that have shaped my investing journey. These aren’t hard-coded recommendations or stock-picking tips. Think of them as mental models — ways to approach long term investing with more clarity and less anxiety.

#1 — Don’t Predict the Market

One of the biggest mistakes I made early on was trying to predict market movements and time my entries.

It rarely works. Trust me.

No one — not analysts, fund managers, experts — no one has been able to consistently predict market movements accurately over a period of time.

Successful investors don’t predict market trends. The react to them.

You might get a prediction right once or twice, but not every time. So relying on predictions is essentially hoping that your prediction is right.

And Hope can never be a strategy.

It must be backed by some technical or fundamental understanding.

#2 — Risk of Waiting > Risk of Buying

At our core, we all fear the same thing — what if the stock drops right after I buy it?

Let me save you the suspense — It will, at some point.

And despite that risk, I choose to dollar-cost average into stable assets. And do you know why?

Because more often than not, the risk of waiting is greater than the risk of buying.

Haven’t we all heard stories of our –

• Parent’s saying they’d be millionaires today if only they had bought property in the 90s?
• Friends saying they could’ve retired today if only they had bought Bitcoin when it was peanuts?

Risk of buying is always worth taking than the risk of waiting.

If you invest in a good asset today and the market corrects tomorrow, that’s usually a temporary loss of capital. But if you don’t invest and the market rebounds, that’s often a permanent loss of opportunity.

Of course, this doesn’t mean you go out and start buying everything recklessly. An undervalued and oversold asset is far better than overbought and overvalued asset.

#3 — Time in the Market vs Timing the Market

Today, we all know Warren Buffett as the most successful investor of our time. But did you know that 80% of his wealth came only after his 65th birthday?

Buffet’s expertise is investing but his real secret is time.

The only way to navigate market volatility and build wealth is by not quitting. Even the best of assets bought at the best of prices will experience rough patches.

Learn to spot a good deal when you see one, learn to identify oversold and undervalued opportunities– it all comes only with time in the market and staying relevant, not from predicting the market

Time in the market is always >> Timing the market.

#4 — When in Doubt, Zoom Out

If you ever feel anxious or uncertain, take a step back. History offers some comforting statistics.

In the context of investing, let me share some anecdotes with you –

• Market crashed over 50% during the 2008 Global Financial Crisis, but by 2021 it had tripled.
• During the pandemic, markets were crushed 34% in a month and yet recorded new highs within five months.

Time and again, data shows that while markets are volatile in the short term, their long-term trajectory has been upward.

Markets move in cycles. Volatility is inevitable. So what may feel like the end of investing could actually be one of the best buying opportunities. So — when in doubt, zoom out.

I hope these frameworks help you approach investing with a calmer and more grounded mindset. Such mental models are always a work in progress and are shaped by reflection, experience, and mistakes.

I would encourage you to build some of yours based on your personal experiences.

I hope these frameworks help you in your investing journey and offers a foundational understanding about the Basics of Investments. Such mental models are always a work in progress, and I would encourage you to build some of yours based on your experiences.

What’s one investing principle you swear by? Drop it in the comments!