Money and Finance
- Some Investing Advice For My Son
My wife and I recently welcomed our son into the world and, like any new parent, I've been thinking about all the things I'll need to teach him as he grows up -- how to ride a bike, how to read, and, of course, how to invest. So with a few minutes...
- 3 Ways To Get Better At Selling Stocks
Show me somebody that has a stop-loss order of 10% below their purchase price, and I'll show you someone that's guaranteed to lose 10%. - Peter LynchIn many ways, selling a stock is a tougher decision than buying one. A quick look around Google,...
- 9 Tips For Becoming A More Patient Investor
Even though the tag-line of the Clear Eyes Investing blog is, "Patience is the individual investor's greatest advantage over the market," patience is a virtue that doesn’t come naturally to me. Maybe I played too much Nintendo as a kid or something,...
- A Simple Guide To Selling Stocks
Last weekend, a good friend came to town for a visit. We both started our financial careers on the same day -- and in the same training room, in fact -- but our career paths diverged a few years ago when he went the financial planning route and I went...
- 5 Questions To Ask Yourself Before Buying A Stock
1. What do I know about this stock that other investors don't? Every investor who has ever bought a stock believes it to be undervalued or under-appreciated by the market, but before you press the "buy" button it's absolutely critical to...
Money and Finance
A Fine Line Between Patience and Laziness
"Perhaps the strongest feature in his character was prudence, never acting until every circumstance, every consideration was maturely weighed; refraining if he saw a doubt, but, when once decided, going through with his purpose, whatever obstacles opposed." - Thomas Jefferson on George Washington
To be an investor is to be a decision-maker. Buy or sell. Take action or do nothing. Invest in Stock A or Stock B.
The frequency and weight of the decisions can be overwhelming at times -- particularly if you're investing other people's money or recommending stocks for people to buy or sell -- but even as an individual investor, you're still making decisions every day about your portfolio, whether they're explicit or implicit in nature.
As a friend of mine likes to say, "Any day you aren't selling a stock you own, you're buying it."
His point is, even if you aren't actually buying more of the stock each day, the very act of holding implies you remain confident in the investment's prospects. Though you're taking no action, you are deciding there's more upside.
Over the longer-term, our investment performance reflects the wisdom (or folly) of our decisions, so it's critical to be aware of the decisions we must make.
By no means is this a call to more trading activity, but rather to more thoughtfully consider each of your investments by asking questions like:
- If I were starting over, would I buy this stock at this price today?
- Am I holding onto this stock for the wrong reason (e.g. emotional attachment, etc.)?
- What do I know about this company that other investors don't?
Asking these types of active questions is particularly important for long-term investors like us because we're prone to errors of omission -- that is, failing to take action when action is prudent.
There's great value in being patient, of course, but there's a fine line between patience and laziness that's important not to cross. By actively considering your investments -- even if the decision is to do nothing -- it reduces the risk of being lulled into holding onto an overvalued stock or onto a business with a deteriorating competitive position.
Stay patient, stay focused.
Best,
Todd
Follow me on Twitter @toddwenning
- Some Investing Advice For My Son
My wife and I recently welcomed our son into the world and, like any new parent, I've been thinking about all the things I'll need to teach him as he grows up -- how to ride a bike, how to read, and, of course, how to invest. So with a few minutes...
- 3 Ways To Get Better At Selling Stocks
Show me somebody that has a stop-loss order of 10% below their purchase price, and I'll show you someone that's guaranteed to lose 10%. - Peter LynchIn many ways, selling a stock is a tougher decision than buying one. A quick look around Google,...
- 9 Tips For Becoming A More Patient Investor
Even though the tag-line of the Clear Eyes Investing blog is, "Patience is the individual investor's greatest advantage over the market," patience is a virtue that doesn’t come naturally to me. Maybe I played too much Nintendo as a kid or something,...
- A Simple Guide To Selling Stocks
Last weekend, a good friend came to town for a visit. We both started our financial careers on the same day -- and in the same training room, in fact -- but our career paths diverged a few years ago when he went the financial planning route and I went...
- 5 Questions To Ask Yourself Before Buying A Stock
1. What do I know about this stock that other investors don't? Every investor who has ever bought a stock believes it to be undervalued or under-appreciated by the market, but before you press the "buy" button it's absolutely critical to...