Throughout the past 30 days of wild volatility, here’s what I didn’t do.

Panic.

Worry.

Sell.

In fact, the best I did was add to a couple of positions yesterday.

The world was already in an uncertain state for the past 3+ years. It’s just that with the market rising, we pushed the issue to the back of our  mind and ignored it.

If you read Howard Marks latest memo, On the Couch, he explains the problems and the psychology side better than I ever could. (Go read it)

But here’s a quick summary of how to succeed in this market, and why most people fail.

In order to be successful, an investor has to understand not just finance, accounting and economics, but also psychology. – Howard Marks

Lack of self-control emotionally is why most investors fail in the stock market and why most people lose money in the stock market, but I add other aspects in this article.

People who have failed will often try to blame the market when in reality, most investment failures fall squarely on the investor.

What I’m writing here is nothing new. It’s obvious.

It’s so obvious and familiar that it’s dangerous.

Familiarity is dangerous.

Say you go to a friends home who lives close to the airport. A plane flies by and the sound of the jets are numbing.

Yet your friend doesn’t notice.

“Didn’t you hear that?” you ask.

“Hear what?” he replies.

That’s what familiarity does to you if you aren’t keeping up with people like Howard Marks who pokes at you in the right way.

You don’t notice your bad habits and the obvious signs that you’ll lose money.

People Fail Due to Greed and Speed

It all seems so obvious: investors rarely maintain objective, rational, neutral and stable positions. First they exhibit high levels of optimism, greed, risk tolerance and credulousness, and their resulting behavior causes asset prices to price, potential returns to fall and risk to increase. But then, for some reason – perhaps the arrival of a tipping point – they switch to pessimism, fear, risk aversion and skepticism, and this causes asset prices to fall, prospective returns to risk and risk to decrease. – Howard Marks

People whose vision is clouded by seeing dollar signs and want to make a lot of money fast are setting themselves up for disappointment and failure.

Sure, they may get lucky here and there, but the combination of greed and speed is the complete opposite of the Old School Value approach where you use a methodical approach and take a long haul approach.