This post may contain affiliate links at no additional cost to you.
Before reading, just keep in mind this disclaimer: “Don’t you know opinions are like assholes. Everybody has one and most of them stink.”
I have been dealing with some skin allergies for the past month. My cockroach DNA has failed me. They say willpower is limited and I assure you I’ve been using all of my willpower to keep myself from scratching. This time I’ve turned my discomfort into concentration and powered through on several mainstream and fringe topics of stock investing. It has been a weird obsession lately possibly due to the fact that I can use it to distract myself.
You will not see me give much investment advice here. It’s a very personal thing from my point of view. But because I’ve been submerged in nothing but reading, I figured why not write a post on it.
I like looking at other people and their portfolio but spreading out ours feels like an internal molestation for me even though we have done pretty well. The only standout thing if you look at our portfolio is probably the $100k we have sitting on the sideline unvested right now. We have been holding that “one hundo” since early August in the money market.
Some might think sitting on cash is dumb. While some investors are sitting on large cash reserves for their own purpose.
For us, it is a reserve and something to experiment with since it’s shavings from the Amazon bush. Emotions are a huge hurdle when it comes to investing. My husband and I are emotionally attached to some stock holdings. Much of that invested wealth we built together, hand in hand. At the discussion of selling few remaining shares of our AMZN, it brings water to my man’s eyes. That financial occurrence happened after we started our married life. It hallmarked one of our biggest fight to date and working out that to start our “true life” together as a dream team 🙂
Guys, I’m packing for FinCon 2018.
Please let me know if you guys want to hang out at FinCon by messaging me on Twitter.
OK, back on topic. This isn’t actually me pulling bubbles out of my heiny. This is a small partial conglomerate of information I’ve stored up and jotted down as notes from actual reputable authors. Bias sampling though? Totally! 😁 But I think the basics below are pretty important. Nothing groundbreaking but definitely something to keep in mind for all investors out there, especially these days.
1. Avoid Checking Stock Prices
Like oh my gosh, get a life.
If you’re glued to your brokerage every second of the day “rebalancing” on the drop of a pin, I can almost guarantee it will end badly for you. Willpower has been proven and researched within a limited capacity and each “call to action” on the monitor eats away at that willpower. This was one of my first financial lessons. Before I jumped into topics like budgeting or saving or FIRE, I was moving towards investing and had an online journal called Wall Street Stray (cute name huh!). Hubby and I were naturally frugal and had the basics down but investing was a different animal. Although I thought was a little dry, A Random Walk Down Wall Street is a great classic. I only fell asleep to it, maybe…30 times. Still sufficiently full of great knowledge though!
Anywhoo, what was I saying? Yeah – everyone should be as absent-minded as I am. Check once a quarter or even once a year. It’s better for your psyche.
2. Avoid Mental Priming
Silk, silk, cows drink ____.
Oh my God did you think milk? Hahahahaha no you adorable human, cows don’t drink milk.
And that’s mental priming. Our brains are sort of lazy that way. It’s OK! Let’s all be stupid together forever.
Be very careful where the source of your investment information comes from. Own mental schemas are often tainted by the first touch of knowledge and this creates the selective way we absorb information going forward. You can’t safeguard yourself from tainted information. When you broadcast what you’re holding people will give you their opinions on the subject. It could very well be correct or sourced from genuine care but it could also be from a Greater Fool too. Think how easily talking out loud could muddy your psyche – I don’t use the phrase “internal molestation” often but poking and prodding in your portfolio in front of others is like…a mild violation on the personal finance level. Just saying…
3. Keep Investment Ideas (Mostly) to Yourself
Besides this is “generally good advice” post, I fully intend to take this advice.
Study the company’s public filing first and remain neutral. The moment you talk about your investment idea, it’s no longer just about the money. Open the floodgates. It’s now also about your ego. Being “right” is at stake! None of this will make you a better investor.
I never reveal my cards publicly so I don’t know how it feels. But I’ve seen tropes of this in real life whenever someone has a favorite sports team and behaves like a maniac after their team wins. It’s pride and emotion before logic.
At our age, we have only seen gains so rightfully I’m the experience newbie. Unfortunately, there is not much I can do or learn about myself right now.
Now I don’t think this rule is a hard rule that must never be broken. Everyone needs a new perspective once in a while and sometimes the advice is damn good! But never fold to someone else’s opinion blindly. You have to choose your circle of competence on investment subjects and remain neutral. POKER FACE IT UP CHICA.
4. Don’t Buy or Sell During Open Markets
Being naturally cautious, I usually don’t buy stocks at market price. I only place limit orders in my Robinhood (no-fee brokerage) after I successfully vetted for what I’m looking for. It will give me some time to reconsider my purchase as it’s going through. The swipe up feeling makes it really sobering because I limit myself to no more than 20 individual stocks which makes “space” limited so I better be smart about it. Not to mention for a lower price that I know I can get in a day or few days. Ample time to be sober about that choice. Some people are too concern with FOMO to mess with limit orders.
5. Stock Tumbled? Don’t Sell for 2 Years
I know we are not the only ones emotionally attached to certain investments. I held on to some stocks that did exceedingly well when I should have sold. It’s hard to let go even though the “train is at your stop” already.
And thennn, there’s always a little pain too when you have to sell something at a loss. I find I suffer very little because I am generally very nonchalant and certainly not heavy-handed to risk too much. However, I still recommend using this same safeguard to void myself just in case. Warren Buffet advised others to buy something as if the market was going to be closed for the next 5 years. Essentially, be firm in your faith and carry on. Do not mind the ever-changing environment of the daily ticker.
I make sure the fundamentals are solid and business is good. Then put yourself at ease, no matter what by holding for 1 or 2 years, no matter the loss. Then cut ties after that 1 to 2 year mark when I feel detached and no longer “care” emotionally.
Sometimes stocks are cyclical. I notice most of my biggest losers within the first few months bounced back stronger around the 2-year mark even though not much has changed to the company performance or backbone. Odd but that’s how it is.
My husband does the cut your losses thing like a pro. But we’re different in that respect and that’s why we have our own Robinhood accounts. I don’t buy into the “salvage” and cut your losses argument because you are carrying over the emotional vulnerability of loss on the backburner. It’s out of a boiling pot into another boiling pot. Not to say it’s wrong, there are great arguments both ways for and against!
6. Be Frugal Boring Freaks
Gee, I’m totally biased wahahaha. There’s a crap ton more to it than that and most of it comes down to temperament actually. But these 3 things were mentioned a lot – albeit not in those exact words – but I shaded in exactly what they meant.
(These texts are all little dry…written by dead old rich guys and such. Ya know.)
When you have a healthy mentality to frugality, you’re going to be less greedy and less pressured to take stupid moves for those riskier gambles. Boring because investing require a lot of “zen” so if your life is upside down (bad divorce, a sick child, etc.) it’s probably better to step away. You can very well be considered “boring” as an index and mutual fund investor BUT WHAT’S WRONG WITH THAT. Boring is good, what’s wrong with being boring?!
The last one, freak, yeah I can write an entire blog post on why freaks typically do best in life but I’m boarding soon.
These are a few things I grabbed as takeaways that would interest novice investors. Not everything I mentioned will work for everyone. Differences in personality, previous experience and knowledge will make this road your own. See this is exactly why no one should be giving any firm investing advice and definitely not on the internet.
Needless to say, never invest money you’re not willing to lose. That’s easier for some people than others, for us, we don’t exactly care or have anything on the line. Frugality is good like that. You can feel rich anywhere.
After that, the more you move away from the basic, the more it becomes opinion. I jotted these down for a reason but they’re my reasons. I’ve mentioned before my husband isn’t learning about stocks like I am so this is all me jotting down what appeals to me. Take for example, even in the good times I hated messing with real estate so I exited as gracefully as I could after growing up a little. I knew it was not for me after the adrenaline wore off. I don’t know how other bloggers deal it and like it.
Part of getting older is about learning. Everything above is definitely things to keep in mind but hey, you’re the boss of your money at the end of the day. Just don’t try to be super stupid or overly clever and do due diligence.
Stuff I Use For Beer Money
Dosh: Dosh is a unique cashback app similar to high reward credit cards except you don’t have to bother getting one. Simply link your current cards to the app and get cash back! No need to scan receipts, no turnaround wait time for cashback – Dosh is nothing but instant cash back! Get a free $5 bonus upon signup and linking your credit card.
BeFrugal: Cashback websites like BeFrugal offer kickback money and referral savings to the user. Purchased a $50 sweater at a retailer that offers 10% back through their portal means you will receive $5 in savings payable from BeFrugal. They have over 5,000 retailers for shoppers including Amazon and eBay for relevant categories. Sign up and get $10 when you join.
Ibotta: I thought this app was overrated before trying it myself. The “any item” promos are like picking up a quarter everytime you scan a grocery receipt. Gimme all dem coins! Ibotta also hosts promos and contests for you to save more by shopping on a wide variety of brands and groceries. Get $10 if you sign up with my link.