Stop checking stock quotes everyday from this moment on

Do you still remember the very first time you bought a stock? I still do. The feelings that were contained within me at that moment I use my father’s trading account to execute my virgin trade was, inexpressible. It was a barometer of emotions which includes sheer excitement, enthusiasm, happiness and, of course, a sense of anxiety, fearing that your first investment will end up in the red. Under such a plethora of emotions, I can’t stand the urge to check the stock prices and stock news on Yahoo Finance everyday. I sat in front of my desktop everyday before the market opens, and stare at the movement of the stock charts. My heart was thumping at the same rate of how fast the stock price was changing. I believe I am not the only one here. Any investor will have a similar experience when they first start know how to trade.

However, it’s not a good news if you still carry this habit with you after years of stock-investing experience. There’s a high probability that you are earning significantly less money than your peers in the stock market. Statistics and researches have shown that investors that monitor company news and stock price everyday tend to make 53% less profit than investors who check the company news and stock price once a month. This fact may come as a shock to some of you, as monitoring stock quotes and company news frequently doesn’t seem to be the culprit of your poor investment performance. Hence, I think it’s worth it to delve deep into the cause-and-effect relationship between the two matter discussed above.

First and foremost, please keep in mind that it’s virtually impossible for you to eliminate your emotions when you are focusing on the stock price every moment. In fact, ‘negative emotions’ like anxiety, greed, and fear will spread like wildfire the more frequently you check your stock quotes, and to put it in another way using Buffett’s quote:

“Fear and greed is the foe of the faddist”

When fear and greed is acting on us, they will crush our analytical reasoning skill and rationality. This is because we have already drained most of our brain power and mental energy while worrying about how the stock price is doing every now and then, we are too exhausted to evaluate the attractiveness of an investment properly with deliberate thinking. Consequently, we substitute System 2 thinking with System 1 thinking to make decisions with intuition rather than logical reasoning. That often leads to very, very bad decisions and eventually poor investment record.

Secondo, most of us are prone to take more action than we used to if we constantly check on company news and stock prices, which will trigger the do-something bias. Short term fluctuations in the stock prices should be a noise that you are supposed to ignore, but you can’t stand the itch to do something when you keep on absorbing new information on the company’s feed and share price. Therefore, you start reacting to every small portfolio fluctuations and churn your portfolio regularly, even though most often the best decision is just to do nothing. On one hand, frequent portfolio rotations violates the principles of Occam’s Razor, which by its logic states that less decisions = less errors. On the other hand, the meagre trading cost incurred in every trade will add up to a significant expense that can’t be ignored as it erodes our investment return.

Alas! Many investors still have the misconception that constantly updating themselves with the latest company news is a key step to make better investment decisions. It’s sad when the true fact is that doing so will only drag you down into the ‘information overload’ quagmire. Quoting you an example, let us take a look at the ‘latest news’ of Disney corporation.

Screen Shot 2017-06-26 at 11.38.33 PM

It’s not that hard to notice that most of the recent news covered are either analyst opinions (which hardly count as an useful information from the company itself) or unimportant little matter that is irrelevant. Failing to discover how inefficient it is, we would have wasted a large amount of time seeking for low-quality information and reinforces us to think with a short-term lens. Garbage in, garbage out. It’s no wonder that we always make poor decisions when we shape our investment thesis on information and inputs that doesn’t have huge influence over the company’s future position in the long run. Poor investment record turns out to be the perfectly reasonable outcome in this scenario.\

I don’t care how you are going to make it and what way are you going use, just stop checking on company news and stock prices every moment if you ever care about succeeding in investing. I’ve been there and done that, so do many others that I’ve witnessed in my life. It’s insidious, and you may not know why are you failing in the stock market until you came across this short memo. I merely hope my advice and perspective can help you pull yourself out from this dreading habit.

I would like to end this note with an amazing quote which I stumbled upon recently.

“The stock market is a device transferring money from the impatient to the patient”  – Warren E Buffett

How to be lucky in your life

Luck is one of the things that can be obtained by literally everyone on this world, yet so many complained about their misfortune in life. In fact, I am actually shocked when I get to know that so many people tend to think that luck was unattainable in life. Today, I am going to share some of my perspectives on luck and how we can substantially improve our luck in life.

SONY DSC

1. Think positively

The first step to have a lucky life is to think positively about things that happen in your life. Think about it, how can we possess luck when all that is stuffed in our mind is negativity? Imagine this scenario: You are fired by the company which you have worked 20 years in it because of an economic recession. Your subordinates which is in many ways less competent than you, just took over your position. You’ve lost your bread and butter overnight, you still have three kids to raise and your mortgage loan to pay. You can choose to lock yourself in the bedroom and complain about your misfortune all day long, or sit down and think of what to do at this moment to overcome this hardship together with your family. One thing that can be certain is that the sticky situation that you are facing isn’t going to change. Instead of complaining like an immature boy, why don’t you position yourself optimistically and view this as an opportunity for you to rethink about who you are and a chance to pursue your dreams? God always leave many doors opened when he shut one of your window.

2. Surround yourself with positive people

Since we want as many positivity as possible in our lives, we should always surround ourself with positive people, people that can make our lives happy (In fact, many studies show that our happiness is directly proportional to luck as we perceived in our lives). There is always a saying, ” Tell me five of your closest friends and I’ll show you what kind of a person you are ”. Negativity is contagious; it can be spread through words and actions in your everyday life bit by bit. Hence, the easiest and time-saving way to improve your luck is to expose yourself to optimistic peers. You may even start to think of how lucky you are to come across those people in your life !

3. Pursue knowledge and observe things

Knowledge is power. Knowledge is also the source of luckiness. Many people may wonder, what does knowledge have to do with luck in our lives? This question can be easily answered by throwing out more questions such as: Is Jeff Bezos lucky to catch on the rapid development of the Internet when he build Amazon? Is Warren Buffett lucky to build his wealth in the stock market when the American stock market is in its golden era? Is Bill Gates lucky because his mother is on the board of director of IBM and this leads Microsoft to get the contract for the operating system, which eventually makes Windows the default operating system of every PC?

The opportunity is there for everyone, Jeff Bezos isn’t the only one to be there when the Internet is growing rapidly and millions of people grow up in the same era as Buffett in the same country. Why only few of the population saw what was coming? Are the rest of them truly unlucky? No, it was because they simply do not contemplate what was happening around them. The depth of their thinking and knowledge render them unable to capitalize on the opportunities that they are given. Every ‘lucky’ guy is ready to act on the chance they are given and that is what makes them ‘lucky’. Knowledge enables them to discover chances around them and gives them the ability to tackle on these life-changing opportunities. There is no way Bill Gates will be offered the operating system contract by IBM if he doesn’t have a sensible business plan and impressive business acumen. The source of his luck comes from his ability and his ability comes form accumulating knowledge and constant learning.

Set you goal to be a little wiser everyday, because that means being a little luckier everyday.

4.  Treat others kindly

One of the by-products of treating other people well is being able to gain more luck in your life. Little pleasant actions such as offering your seat to an old lady in the bus, buying breakfast for homeless and sharing your happiness with your colleagues in your everyday life will establish you as a ‘positive person’ in other people’s mind. Remember the old axiom “If you treat people well, people will treat you well” ? It is highly likely that people around you will go out of their way to support you when you are facing downturns in your life if you be kind to everybody. Their support will make the initially depressing situation less deplorable and unexpectedly turn it into only a small problem for you. Besides, people will be willing to share their knowledge and insights with you, they would’ve also thought of involving you when they come across a rare opportunity that will benefit both of you. This can turn out to be the greatest source of luck in your life.

5. Visualise success

How well do you think you will perform on a date, job interview, or sporting event if your thoughts are filled with reasons you will fail? The odds would not be in your favor. The best athletes see themselves winning a game long before it starts. The best stage actors imagine an audience exploding with laughter and applause before they set foot on stage. If you’re going to a job interview, imagine how thoughtful your responses will be during your drive. If you’re preparing for a date, imagine how classy / handsome / sexy / funny the other person will find you while you get dressed. You must first see success happen before you can make it happen.

I think most of you have probably realised that all these steps above aren’t any big secrets. Everyone knows it and they are not that hard to implement, yet many still fail to realise that luck is already on your side. Being able to carry out day-to-day activities without difficulties, being able to see your parents everyday, being able to read this post comfortably at home.

Having a normal day is perhaps one of the best thing that happen to us 🙂

shsh