With investing, as with many pursuits, some parts are productive and others less so.
Finding and reading the reports of listed companies you are interested in is productive. Reading classic investment books is productive. Checking how much your portfolio has gone up and down three times a day, not so much.
One of the most common unproductive pursuits that investors partake in is checking the prices of stocks in their portfolio regularly. Prices are always moving up and down throughout the day and it is tempting to check in, especially if a stock has been going well. Daily price movement does not bear much relation to the long-term prospects of the underlying company. If you are always checking the price it may entice you to make trades you shouldn’t.
What other investors are doing
New websites that have a social media aspect about them are always giving metrics about what other people are doing. What is the most popular stock among the platform’s users? What is the most traded? What is the current “must have or you will be left out forever” stock? Treat all these as diversions as they can cause you to lose sight of your long-term objectives.
What other people are buying should be of no more than passing interest to you. These are often the most popular, hot stocks at the time. There is a long history of these stocks rising to unrealistic levels before the bubble bursts and those who paid the high prices are left well out of pocket. The real long-term money lies in looking for stocks that are boring, unpopular, out of favour and not followed by brokers.
Sell to the sleeping point
Spending a lot of time and mental capital (which is as important, if not more important, than monetary capital) on one of your stocks is also a waste of time. If you are that worried about a stock you own perhaps it is best to sell. Consider selling all or at least enough of the stock so that you stop worrying, and reinvest the capital in a stock that is not going to keep you awake at night.
Trying to figure out what the market is going to do in the short term is also a waste of time. This is called market timing and takes time and energy away from what you should be doing. What you should be doing is looking for good companies to invest in that will persevere through downturns in the market. Predicting market movements in the near term is difficult and in my opinion not worth the time – for a more detailed explanation see the article “Timing the market”.
Share market forums
Posting on, or reading market forums or twitter is also fraught with danger as you don’t know the people posting and/or their experience. People use social media for all sorts of dubious reasons such as to talk up their own book (which is talking up a position they are invested in, in the hope of getting others onside and pushing the price up). The people you should be listening to will be busy researching rather than constantly posting updates.
While there is an increasing amount of information and distractions surrounding the market you will benefit from blocking out the noise. Focus instead on facts and fundamentals to unearth good companies which the market has undervalued.