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Here’s What Astronomy Can Teach Us about Investing

Right above is a picture of the moon that I had taken using my smartphone through a telescope. You see, stargazing is a new hobby I had recently gotten into.

As I scoured the internet for information about the heavenly bodies and spent night after night looking at our hazy sky, I gradually realised why I had fallen in love with this new hobby of mine: Turns out, there are a great many similarities between investing (another great passion of mine – which might be obvious!) and stargazing. In fact, stargazing can even teach us a lesson or two about investing.

Getting the basics right

In astronomy, we need to first orientate ourselves and know where we are before we can even begin looking at the sky. We also need to learn about the basics of viewing and what we can expect to see.

Similarly, in investing, before we even begin buying shares, we should learn about the basics of the share market. And speaking of which, we at The Motley Fool Singapore have prepared a special free report titled What Every New Singapore Investor Needs To Know. It is a quick five to 10 minutes read on what’s really important about the share market and is a great guide for both new and experienced investors alike regarding the basics of the market.

Looking at things with different lenses

If you are awake at 5:45am tomorrow, try looking to your east, just above the horizon where the sun is expected to rise. There, you will see a bright star. But, it is more than a star – that bright object is actually Jupiter, the largest planet in our solar system. With our naked eyes, you can’t really tell Jupiter apart from a normal star. If you had used a set of binoculars, you would have seen a small tiny orange dot – that would be a sign that you’re not looking at a normal star, although you still can’t be sure of what you are looking at. It’s only through a telescope where you can actually see the details of that tiny orange dot and know that you are peering at Jupiter, a planet 1,000 times the size of Earth. In other words, you need different lenses .

Similarly in investing, when we analyse a company, we cannot look at it from just a single point of view. If we do that, we might only see part of the company and mistake it for something which it is not. We can only form a detailed picture of what a company really is about only by viewing it through many angles; talking to different people; and understanding the various opinions others have of the company. In other words, we have to view a company through different lenses.

Be humble

So far, I’ve showed you how astronomy teaches us to get the basics right and to look at things through different lenses. Now, we’ve reached the most important lesson, and that is, we must be humble and patient when investing.

You see, the sky in no way bends to our wishes on demand – we need to be patient in waiting for the right moment to discover what we seek in the night sky. It’s just like in investing – our investments are not obliged at all to appreciate in price just because we have bought them. We need to have the patience to wait for our investment thesis to pan out and to allow a company to compound wealth for us.

In astronomy, the amount of knowledge to be absorbed is so immense that it is almost impossible for any one person to learn all there is to know in a single lifetime – and I’m humbled by that fact. It’s also the same in investing – there are so many different industries, companies, and styles of investing to learn about that it would be nigh impossible for an investor to know it all in one single lifetime.

Foolish Bottom Line

All told, if we remain humble and have an open mind, there will be new discoveries to be made every day in both investing and stargazing. And, that’s what makes both subjects so fascinating and magical for me. Here’s to clear skies ahead for you, dear reader. Fool on!

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim does not own any companies mentioned.