We are all flying through life. Busy busy busy. Important things to do. Can't talk, can't stop, can't go, can't come, can't make it, can't do it.
Time has become the most valuable asset on earth and the most generous of gifts. Use it or lose it. Make it or waste it. We all worry about money but the truth is that the most precious gift you can give anyone these days, especially your family and kids, is your time, and all this technology-driven rushing about that's going on has elevated its value to immeasurable heights.
With this in mind I am going to tell you how to save time in the financial markets, because when it comes to the sharemarket there are a lot of things that waste your time. Here are two.
The first is urgency. The talking heads in the media speak daily and react by the second. That is their gig. And because of their focus on each "moment" they will always paint a picture of disaster when the market falls and a bubble when the market rises.
They will also miraculously appear to be vastly more intelligent and adept at investing than you or I, well you, because they have seemingly miraculously "bought the stock last month", before it went up, or "never liked the stock" when it goes down. But the truth is that they are there to further their businesses and brands by looking clever, and the quality of their commentary is very short term and of little value.
The fact that some TV programs embarrassingly use a countdown clock to economic numbers, and that most of their presenters breathlessly shout their comments tells you the daily news game is about trying to generate urgency, to be animated, to be exciting. But when it comes to investment and financial news, the urgency, I can tell you, does not pay.
If I have learned anything in the sharemarket game over 35 years, it is that you will not make long-term progress with a short-term focus. You cannot stare at your screens all day and make money. Being first does not matter. Being right matters, and in the sharemarket game the only edge the average Joe need concern themselves with is on the horizon because there is no edge reacting to breathlessly urgent talking heads today.
The sharemarket game is to assess which stocks have a future over years not over the next half an hour. Tomorrow all the urgent talking heads will be over-reacting again, to tomorrow's momentary issues. But for your own financial health it's probably best you ignore them (including me). It is just a commercial show. We are building our brands but wasting your time.
The second time waster is emotion. How many more articles do we have to rehash about cognitive bias, emotion and anchoring before everybody gets the point that to be successful investors humans simply have to put their human traits aside. You have to be detached and logical, like Spock in Star Trek, about investment and trading.
When you are losing money it is normal to become emotional, but it is pointless. There is no certainty, there is no Holy Grail, there is just a process of narrowing the probabilities as much as possible in your favour. When you have done your best it is pointless getting upset or elated by the share price performance afterwards. What just happened to the share price has no bearing on what will happen. Absolutely anything can happen and you have to assess and react to that, not get emotional about it and certainly not "care".
Humans are wired for hope, to like, to hate. But there are no "good stocks", or "bad stocks". Vulcans would make much better investors. They are wired to coldly process the information and make a logical, dispassionate decision. Meanwhile human investors get confused, depressed, optimistic, pessimistic, we worry about whether we are in loss, or profit, anchoring ourselves to some previous share price that is now irrelevant to tomorrow's share price.
Human emotions add no value when it comes to clinical decision-making. There is no liking or hating in investment. What you paid for a stock is irrelevant. Instead what you might try, in order to excise your human failings from your decision, is to chronicle your impassive process. We all have our process, a sequence of things we do when deciding whether to buy or sell a stock. We might not know it, and we might operate it without a lot of conscious planning. But we would all do well to write it down, turn it into an algorithm and put it up on an Excel spreadsheet. Only then could our process operate without emotional interference.
The bottom line is, when it comes to investment, being human is a waste of time.
Marcus Padley is the author of the daily sharemarket newsletter Marcus Today. For a free trial of the Marcus Today newsletter please go to marcustoday.com.au
