Why Guts Matter More Than Brains for Investors

August 21, 2023

The most important organ for investing success isn’t the brain - it’s the stomach.

The stock market is not for people who get motion sickness easily during volatility.

Rapid ups and downs are normal.

You can’t be a boxer and be afraid of taking a punch to the nose. It’s part of job description.

Nor can you be a good investor and only expect to see green.

It’s not big brains but strong guts that help investors succeed.

Acclaimed investor Peter Lynch nailed it in an interview many years ago:

If you're in the market, you have to know there's going to be declines…every couple of years you're going to get a 10 percent correction. That's a euphemism for losing a lot of money rapidly. That's what a "correction" is called. And a bear market is 20-25-30 percent decline. They're gonna happen. When they're gonna start, no one knows. If you're not ready for that, you shouldn't be in the stock market. I mean stomach is the key organ here. It's not the brain. Do you have the stomach for these kind of declines?1

More important than having the brains to figure out where the stock market might go in the near term is having the guts to stick to your financial plan over the long term.



  1. Accessed online: https://www.pbs.org/wgbh/pages/frontline/shows/betting/pros/lynch.html