Introduction

"Investing is not just the study of finance. It's the study of how people behave with money."

-Morgan Housel, The Psychology of Money1

Gazing up at the nighttime sky in the heart of the desert is nothing short of awe-inspiring. Across the horizon in all directions, stars brilliantly taunt our imagination. Despite that scientists estimate there are about 200 × 1024 stars in the universe (two hundred thousand million million millon), Dorrit Hoffleit of Yale University used mathematical modeling to determine that the naked eye can only see about 9,096 stars on a cloudless night without the impingement of city lights.2 Don't bother counting, but like the desert nomads for centuries, just a few of the salient stars and constellations were required to accurately aid their navigation across the formless deserts. The night sky has always been nature's most trustworthy GPS.

While metaphorically comparing a nomad's journey across a barren desert to investing in the capital markets may seem obtuse, there are many relevant lessons to be derived:

• That any long-term quest, let alone one that lasts a lifetime, requires planning, a road map, and the right resources.
• That hidden in the sand dunes are life-sustaining wells of investing opportunities and treasures to be discovered. But how far afield to stray before the dangers outweigh the rewards?
• That learning to read nature's subtle signs could improve an investor's fate.
• That, to best navigate across unknown, hostile territory, success is more often aligned with following true North Star behaviors.
• That time spent exploring, overcoming challenges, and self-reflecting can lead to unexpected rewards.

Before launching into the pragmatics of investing, however, consider redefining your mission. Matching self-awareness with ambitions is a key to finding success in life, no matter the pursuit. By understanding the capital markets universe better and where your limits are, the journey will be clearer and easier.

Investors are awakening. "Do-it-yourself" (DIY) investing has come of age. Across all sociodemographic cohorts, investors globally are stepping up to test their mettle in the markets. Unrelenting advances in technology, access to refined data, analytics, and commission-free trading now offer unlimited opportunities for retail investors to enrich themselves. All in the comfort of the home.

According to a survey conducted by the Ontario Securities Commission, 60% of retail investors are men. Yet investing is more urgent for women because of pay inequities in the workplace, a subversion of their productive careers to look after family matters, and a longer life expectancy. The DIY movement affords women the possibility to pursue an investing agenda on their terms.

Whether supplementing day jobs (or lost jobs) with trading wins or fearing to miss out on next-gen IPOs or even being seduced by gamified trading platforms, the reasons for participation are varied. An unexpected outcome from the 2020-2021 pandemic was an increase in social investing activism. Most notably, in early 2021, a titanic struggle ensued between a cabal of retail investors coordinated through the social investing sub-Reddit site "WallStreetBets." To everyone's surprise, in the spring of 2020, the "Davids" were able to strike enough merciless blows against the "Goliaths," forcing several billionaire vulture capitalist firms to the brink of bankruptcy. Melvin Capital, for one, was forced to borrow $3B from fellow venture capitalists just to keep the firm solvent.

The power of investing is democracy in action. And with growing numbers, the network of retail investors is taking on real power. Every trade can be a vote for change. The Fourth Industrial Revolution (digital) is on our doorstep: AR/VR, EV, 3D printing, 5G/6G phones, IoT devices, AI and robotics, the genome project, autonomous vehicles, drone deliveries, SpaceX, and the renewable energy revolution are some of the many ways an investor can choose to participate. Further, in the interest toward building a more sustainable world, environmental, social, and governance (ESG) standards are now more relevant factors of analysis in making better investment decisions.

At this stage, are you prepared to make serious investment decisions that will influence the future of this planet? Ultimately, the best reasons to embrace mindful investing should be to assure a viable personal financial future while supporting businesses seeking to create a better world.

With more than 1 million retail accounts being opened monthly, the capital markets are undergoing a renaissance offering:

• Easier access to unlimited research and low-cost trading platforms.
• The growth of social investing communities.
• Unlimited investment choices, including the fractionalization of assets and IPOs.
• No time-wasting bureaucracy.
• Zero trading fees and no professional fees.
• Access to global exchanges and after-markets trading.

So, like the start to any grand adventure, market-beating fantasies are easily conjured.

Yet, according to Dalbar,3 the leading US independent investment behavior research firm, over a period of 30 years ending 12/31/2018, the average investor lagged the passive S&P 500 index by a margin of 1.51%, annually. Even with a commission-free advantage, this underperformance has remained chronic for decades.

Like it or not, short-term trading is a zero-sum game. For every winner, there will be a loser. And despite holding many strategic advantages relative to the pros, retail investors are generally underprepared to tackle the capital markets head-on. While there are many unique ways an investment journey can get bogged down, the more common themes are:

• No plan - Without a plan, weak convictions and poor diversification get exposed during market corrections, often inducing needless sacrificial selling. It's how an investor acts during difficult times that will define their ultimate success.
• No limits - Making good decisions requires building perspective. Without accountability or guidelines, only an investor's conscience will keep them on a good trajectory. Too many choices without trading discipline can lead to buying on breakouts and selling on breakdowns. Prioritizing principles over profits could lead to better outcomes.
• Attention deficit disorder - Following too many pundits, a short attention span, and easy access to trading technology can entice a long-term investor into higher-risk decisions. Accelerated trading essentially converts solid, long-term investments into short-term gambles, while also increasing the costs.
• Emotions - Passion is the greatest destroyer of wealth. It can seduce us into action against all common sense. At the extremes, greed is just the alter ego of fear (FOMO). Reactive trading never ends well. However, the "behavior gap"4 can be dramatically reduced and even eliminated without having to overtly change an investor's behavior.
• The Rise of AI - Machine learning algorithms are now responsible for 70% of all trades. Per second, any one algorithm will perform thousands of transactions. Humans can deploy about one per minute. Equally, as emotive creatures, we are prone to making cognitive errors that serve to feed price inefficiencies to these AI programs. Learning to trade proactively can help individual investors minimize the disadvantages.

"Strategy without tactics is the slowest route to victory.

1. Tactics without strategy is the noise before defeat."

-Sun Tzu, The Art of War

Running headlong into trading stocks, though, is not for the faint of heart. In the capital markets desert, the signs are subtle, dangers abound, and the treasures are hidden. An investment warrior needs to keep their wits about them and to have the right resources to ensure a successful journey.

Unfortunately, there are no havens. While the day-to-day markets are notoriously fickle and sometimes downright frightening, these are the least of an investor's worries. The greater dangers lie within. In between an investor and every trading decision lies their emotions. Greed and fear are in a constant duel, yet both are compounded when intertwined with unduly risky assets and the combustion of leverage.

In an environment of such high stress and competition, to win more consistently requires a more conscious effort. There are no signposts to warn of the dangers. Staying safely on the path requires discipline. Every trade is a negotiation. Both investors won't be right.

"A funny thing about the stock market is that

1. every time one person buys, another sells,

   and both think they are astute."

-William Feather (1889-1981), publisher and author

Admittedly, the markets are rigged, but not for the conspiracy reasons proffered by social media. Given the test of time, they have overcome every calamity humankind could ever invent and yet, they continue to rise. This is a deeply underappreciated characteristic about investing. Too many live in fear of the markets because they listen to the unwise and the fearmongers, or they just don't yet know enough about themselves. The beauty of the capital markets desert is seeing beyond the...