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1/ I've actually been doing this for quite a while. I look at my overall portfolio on the first Monday of each month. I also take a look at individual positions when material news comes out [i.e. 8-k or earnings].
Short thread on why I do this + my experience. https://twitter.com/SagaPartners/status/1328737967075110915
Short thread on why I do this + my experience. https://twitter.com/SagaPartners/status/1328737967075110915
2/ First some ground rules.
We are all chained by our own psychology. Loss aversion, anchoring, finding meaning in random occurrences - it happens to the best of us.
Even if you UNDERSTAND psychology, you still fall prey to it. You can't escape your hardwiring after all.
We are all chained by our own psychology. Loss aversion, anchoring, finding meaning in random occurrences - it happens to the best of us.
Even if you UNDERSTAND psychology, you still fall prey to it. You can't escape your hardwiring after all.
3/ The best solution is inserting safeguards into your process, so you can't act on this biases.
One of those safeguards is simply not looking at your portfolio on a daily (or for some people, hourly!) basis.
One of those safeguards is simply not looking at your portfolio on a daily (or for some people, hourly!) basis.
4/ Unfortunately, the same people who quote Buffett saying they would own something if they couldn't see the price for 10 years are the same ones checking their stocks at opening bell.
You must practice what you preach!
You must practice what you preach!
5/ Okay, so how has my experience been?
1. I feel liberated. I have more time to dedicate to research. I don't think in terms of where the stock will go (because I don't know where it went!) and I focus more on underlying economics, competition, etc.
1. I feel liberated. I have more time to dedicate to research. I don't think in terms of where the stock will go (because I don't know where it went!) and I focus more on underlying economics, competition, etc.
6/
2. Valuation comes much easier. I don't have the current price as a goalpost in the back of my mind as I try to evaluate future prospects of a firm.
2. Valuation comes much easier. I don't have the current price as a goalpost in the back of my mind as I try to evaluate future prospects of a firm.
7/
3. I feel less anchored to historical movements. I'm comfortable buying something that has gone up 100% in the last year... and something that's down 50%!
Most importantly...
3. I feel less anchored to historical movements. I'm comfortable buying something that has gone up 100% in the last year... and something that's down 50%!
Most importantly...
8/
4. I enjoy life more. Red days don't get me down. Green days don't make me giddy. I feel more composed as an investor and I dedicate more time to reading and thinking. As Keynes said, "go out and live."
4. I enjoy life more. Red days don't get me down. Green days don't make me giddy. I feel more composed as an investor and I dedicate more time to reading and thinking. As Keynes said, "go out and live."
9/
Of course, I miss opportunities. Days/weeks when stocks of good companies approach attractive levels. If you look at your portfolio in monthly intervals, its harder to buy at the "lows" and sell at the "tops".
Of course, I miss opportunities. Days/weeks when stocks of good companies approach attractive levels. If you look at your portfolio in monthly intervals, its harder to buy at the "lows" and sell at the "tops".
10/
But I would argue that the change in MINDSET and the mistakes I've AVOIDED by doing this are more valuable than these opportunities I forego.
But I would argue that the change in MINDSET and the mistakes I've AVOIDED by doing this are more valuable than these opportunities I forego.
11/
Doing this definitely felt daunting at first, but once I got a hang of it, I rediscovered that I'm an analyzer of businesses, not a stock picker. Its a subtle difference, but it has made investing 100x more fun for me
I hope others take this challenge! You won't regret it!
Doing this definitely felt daunting at first, but once I got a hang of it, I rediscovered that I'm an analyzer of businesses, not a stock picker. Its a subtle difference, but it has made investing 100x more fun for me
I hope others take this challenge! You won't regret it!
