Growing your portfolio
I try sometimes to follow general investment discussions on the Internet to see what’s being focused on in general. And there’s one thing I often find that is not at all healthy, and that’s the strong desire for quick wins.
A lot of people jump into trading with the aim of massively increasing their wealth quickly. They approach it like some sort of casino. And with that huge risks are taken. Options are bough and sold, because they give you massive leverage. The time scale is usually no more than a week, if not a day, at most.
This is not investing, this is gambling.
I also enjoy sometimes going to a casino. And I certainly enjoy the odd poker game every now and again. But I don’t do those things with the aim of becoming rich. I play poker because I enjoy spending time with friends (and to pretend I can calculate the odds of my hand), and I go to a casino for the “free” drinks.
Investing on the other hand is a slow endeavor. It’s like growing a plant, maybe even a cactus sometimes. It’s about having a few strategies in place that you feed have stood the test of time, and then just apply these methodologically. The more I study investing, the more I see that people simply don’t have the patience for it.
This is probably why the best advice you can give to most people is to just put their money into a cheep index fund and forget about it.
The worst you can do is check the price of your portfolio constituents daily. This is because it’s a noisy environment, and if you do check it too frequently you’ll just end up getting nervous and make short term decisions. But you want to stick to the long term decisions.
That’s why I only spend a couple of hours each weekend, to ensure my pick of companies remain relevant when compared to the list of ranked companies. Typically I make no big change, and then I more or less forget about it till next weekend when the list is updated.
The last thing I’d want to do was to keep myself “up to date” with whatever is currently being talked about on TV channels like CNBC and the likes. It is simply noise amplification, and it will serve you no good purpose.