3 Psychological Hacks to Win the Investing Waiting Game

The big money is not in the buying or selling, but in the waiting.

Charlie Munger

Success in investing sounds simple. You just need to follow three pillars:

1. Invest in quality companies.
2. Buy them at a fair price.
3. Focus on the long-term (5+ years) and ignore the noise.

But simple isn’t the same as easy.

We have endless literature on how to analyse a company or calculate intrinsic value.

What’s less discussed is the “How”: How do you actually stay calm when your portfolio is bleeding red? How do you ignore the noise when the world is screaming “Sell”?

It’s like health. We all know we need sleep, a balanced diet, and exercise.

Knowing is one thing; doing it consistently is another.

So I was thinking what has worked for me when there’s a noticeable increase in volatility.

How was I able to stick to my conviction to survive the various crises over the past six-plus years (Covid-19 pandemic, Russia-Ukraine War, hyper inflation) and achieved a XIRR of nearly 12%?

Let me share these “psychological hacks” to you. These aren’t 100% foolproof (there were times I still “panic”) but they’ve helped to stay vested when my natural instincts told me to run.

Emotional Buffering: Fighting Bias with Bias

We all know we have biases. While, in general, biases lead to mistakes, at times they can be useful psychological tools.

As I mentioned in my earlier post, My Psychological Buys: “Timing the Market” for Time in the Market, we can often satisfy our “monkey brain’s” urge for action by taking small bites (trimming or buying in tiny amounts).

This satisfies the itch for activity without sabotaging our long-term compounding, allowing us to stay in the market.

Similarly, we can make use of one bias to counter another. Let me elaborate.

From the high of ~S$11 in January, iFAST (AIY) dropped by around 20% to below S$9.

For many, that’s a signal to panic. But because I already held a 300% gain, my brain unconsciously stayed neutral.

Specifically, the “House Money” effect was countering my “Loss Aversion” bias.

To be clear, the “House Money” bias is generally something to avoid. In a strictly rational world, you shouldn’t segregate your profits from your original capital — they are both your capital now.

However, in the heat of a market sell-off, this “Mental Accounting” acted as a vital psychological stabiliser.

By anchoring to my long-term success, a pause was created automatically. That pause allowed the rational me to take over the analysis, which led me to add another tranche at S$8.50 recently.

This emotional buffer is likely one explanation for why winners continue to win: they have the psychological room to breathe when others are suffocating.

TFI, you have a massive buffer from years of investing. If the market drops 20%, you’re still deep in the green. But I’m just starting, so when market drops 10%, I’m losing my hard-earned savings. How do I survive that?

That is a valid question.

The truth is, I didn’t start with a buffer either. I had to build it, brick by brick.

It’s important to get the first win, then the second, and then the third.

Each small success adds a layer of protection to your mindset, making it harder for the next market dip to shake you.

How do you do that? You start with the low-hanging fruit.

Positive Reinforcement: Plucking the Low-Hanging Fruits

It’s natural that you want to get that a return that is multi-fold. But as I’ve written last year in the multibagger series, aiming just for the elusive multibagger could be detrimental.

This is especially when you are just starting out.

Instead, start by investing with the “obvious” wins — stable, dividend-paying blue chips or companies with simple, understandable business models.

Their less volatile stock price afford you the time to pick up the necessary investing skillset while experiencing the real market.

Once you see the first dividend hit the account or your first 10% gain, the market is no longer an abstract casino — it’s a system that works.

It’s just like picking any other skillset: You don’t start biking on a steep slope or curvy path; you don’t start cooking curry chicken for your first dish.

In education, we call this “scaffolding” — building a support structure allowing students to bridge the gap from where they are to reach the next higher levels.

There is no use having them keep practicing the more difficult questions if they haven’t understood the foundations. It only demoralises them, and before long they will lose interest in the subject.

The goal of these early wins isn’t to get rich; it’s to convince yourself that investment is a viable option to generate alternative income sources.

These wins will fuel your confident to keep going.

Value Alignment: Trusting the Management

While the first two hacks depend on your internal psychology, the final piece requires looking outward – specifically toward your alignment with the company’s leaders.

There is no doubt that business fundamentals are vital, and reported numbers provide evidence of success. However, financial data often acts as a lag indicator; it only tells part of the story.

To see the full picture, those numbers must be viewed alongside the direction, strategies, and execution of the management team.

At the end of the day, they are the ones driving the vehicle through both clear highways and sudden roadblocks; we are just passengers.

Unlike an ETF, where conviction is built on a century of historical market data, individual stock conviction is built on narrative alignment.

Think of it like public transport: You don’t board a bus that isn’t heading to your destination.

Similarly, you jolly well alight at the next bus stop if the driver keeps changing the route or starts driving recklessly.

On the other hand, if you and the management are reading from the same playbook, a market crisis isn’t a reason to panic. It’s just a difficult stretch of road in a journey you already know the destination of.

When the “noise” says the world is ending, you look to the management’s actions:

• How are they reacting to these difficult situations?
• Are they still executing the long-term plan?
• Are they adapting to the new information?

That’s why I spend time reading transcripts of quarterly earnings, studying annual reports, and, whenever possible, attending AGMs.

One advantage of investing in local companies is the chance to attend the AGM and hear the leadership speak directly.

The insights received are different from reading a report from a secondary source or AI-generated summary.

If you trust the “Driver” and the route they’ve mapped out, you don’t jump off the bus just because the road gets a little bumpy.

Building the Environment for the “How” to Happen

After surviving numerous crises in my decades of investing, I’ve realised that my moderate success comes more from regulating my emotions than from having a high IQ.

While I have learnt the hard skills over the years, my financial knowledge is, at most, mediocre compared to the pros. It is this psychological infrastructure that allows me to survive the wait.

The noise will always be there. But with these hacks, you finally have the tools to bridge the gap and put your knowledge into practice.

See you at the AGMs.