Today is my second work day back from a couple of weeks off (as you’ll likely know if you read last week’s piece about me being, well, let’s just say ‘involuntarily parked’ on the side of a dirt road between White Cliffs and Tilpa).
I have to say I’m happy to be back — though as soon as I can work out a way to combine investing and travelling the country’s backroads, I’ll be making my case to the boss!
And, as an investor, I never truly switch off that part of my brain.
There’s always something to think about: an opportunity, a trend, an observation that takes me back to wealth creation.
Because I was in Outback NSW, though, while my thoughts strayed back to the market sometimes, my access to those markets was often limited for days at a time.
No internet meant no checking my brokerage account, or the movement of the various Australian and global markets.
And I will confess, when I was in range, I checked the ‘price sensitive’ ASX announcements of our recommendations — but I don’t think I checked share prices once.
If I did, it certainly wasn’t twice.
Our members needn’t worry about that, by the way — I work with some wonderful capital-F Fools who were keeping the home fires burning while I was galavanting around the bush (and could get in touch with me, should the need arise).
For me, checking announcements was the extent of my involvement, for both our services and my portfolio.
And it was wonderfully freeing.
I suppose you’re wondering how I set my portfolio up for such a hiatus? Which trades I made, limit orders I entered, and broker instructions I left?
Fair question. Here’s the list:
But how could I possibly do that?
Anything could have gone wrong while I was gone, right?
Share prices could have moved, COVID cases could have skyrocketed, Donald Trump could have actually worn a mask…
(Apparently the last one happened! I have to say, it was probably the longest odds of the list, but that’s the folly of forecasting!)
But with all of that uncertainty…. especially RIGHT NOW…
How could I be so bloody cavalier???
It’s another fair question.
But I have an answer for this one: because my portfolio isn’t built for daily or weekly success.
(And if you think yours is, either you’re the 0.001% exception, or I have bad news for you.)
See, I have a diversified portfolio.
I have investment theses that I expect will play out over years (maybe even decades).
Sure, there was a chance some diabolically bad news would break that required instant action.
Not a very big chance.
Not even a small chance.
A tiny chance. But, yes, a chance.
So I guess I was taking a risk of sorts in that sense. But the odds were so incredibly small — and, on balance, I reckon I was more likely to make money by staying invested rather than trying to avoid every possible permutation of risk by selling before I went.
I trade so incredibly infrequently that the odds of something happening within that two weeks, that would require me to take action, was tiny.
Funnily enough, I intended to write this article on the road last week. But me getting bogged was too good a story not to share (and it had some investing takeaways, too!).
But in the meantime, I saw this Warren Buffett quote tweeted by my Canadian colleague (and good bloke) Jim Gillies:
“Lethargy bordering on sloth remains the cornerstone of our investment style”
I’m not so pithy, but my preferred approach mirrors that. I have regularly said my style — and the approach I recommend for our members — is:
“Be slow to buy and even slower to sell”
Because it’s hard to find really great investment opportunities.
And, once you’ve found them (assuming you’re a good judge), it’s often the case that holding such investments through thick and thin is a much better approach than trying to cleverly sell them because of some temporary quality or price issue.
Yes, sometimes there’s a reason to sell. It’s why that quote doesn’t say “… and never sell”.
But not only am I loathe to sell quality companies… but doing so creates another problem: what to buy with the proceeds.
If I have another cracking idea, it’s easier. But selling one company and buying another means you have to be right twice — once for each transaction.
And if you have a winner — a company that’s continuing to succeed in the marketplace — you rarely should want to sell anyway.
It’s certainly not going to form the basis of an online CFD trading ad, is it?
The thing is, in my — and others’ — experience, it works.
And it’s a helluva lot better than the alternative.
If it’s action you’re after, dear Fool, buy a fast car (and drive it within the speed limit, of course!). Buy yourself an XBox. Take up paragliding.
The ASX — and investing in general — isn’t the place for action, activity or trying to be too clever by half.
If that shocks you, good.
As Pascal wrote:
“All of humanity’s problems stem from man’s inability to sit quietly in a room alone”.
If it’s true in general, it’s even more accurate for investors.
Put down the mobile trading app. Log off your online brokerage account.
Go outside. Garden. Fish. Go shopping. Take a walk around the block. Read a book.
Or, like me, see if you can go for a fortnight without checking your account.
The world won’t end, and you’ll be better for the patience and calmness you learn.
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Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.