Otherwise you will keep hitting resistances, or keeping rotating around the pivots, or you may slip on downtrends, or you may find it hard to climb in upwards, or you may find yourself squeezed into closing triangles. In the end, you just end up waiting for somebody to throw you out of it, only to fall with loud thud.

I buy stocks with an objective to hold it forever. This, for most people, is very difficult to grasp. I started investing about nine years ago (eight of which are being buy-and-hold investor). In these eight years, I can count on my fingers how many times I have sold a given stock. Conversely, I will have to check my records to determine how many times I have purchased a stock.

My friends and acquaintances keep telling me if you never sell a stock how you will make money. You need to buy low and sell high to make money and increase your wealth. I politely ask them only one question, “You have been buying low and selling high for xx number of years. What is your wealth?” Almost every time the voice starts stammering.

To some of them, who are close and good friends, I put a proposition to them. I tell them, since your “first investment” to “as of today”, tell me honestly what has been the real percentage appreciation to your “wealth” (chuckle!). If it is more than my “wealth” appreciation (again more chuckle!), then I will transfer my entire portfolio to you. If not, then vice-a-versa. What is surprising to me is many start mental calculations; hmmm, not including tax, and transaction, ignoring commissions, not considering my subscription fees, blah blah blah…. I end my conversation there itself. Beyond that it’s a waste of time because they do not understand the meaning of total return or wealth. Discussing these two aspects is a topic in itself so I will leave this for future post.

I must admit it is very difficult to keep sanity during bad times. When things are going bad we do either of these two things (1) our natural instinct is that we want to sell too early; or (2) if we did not sell too early, we will continue to hold on to it, even when it is not worth it. Not only that, it is also very difficult to exercise self control when things are going good. Every financial expert and investing literature will tell you, don’t watch your portfolio every day. But if it was that easy everyone would do it. So how do I control myself and keep my instincts on check?

I counter balance the urge to watch, manage, and review my portfolio by doing something else. I drown myself in:

1. Stock analysis: I continuously read about different companies, their business model, their operating history, their financial statements, and do quantitative or qualitative analysis.
2. Financial blogging: Earlier, I used to write notes in excel sheets. Now, I document my thought process or my analysis by writing on this blog. It keeps me occupied. Some readers may think I only started this blog 3 months back. Yes I did, but before this I used to blog on one my other blog space.
3. I also engage in constructive discussions with some of my fellow bloggers.

These activities give me a sense of feeling that I am doing something for my portfolio. It distracts me from daily market chatter of pivots, resistances, slopes, channels, stop losses, limits, etc. These activities help me generate my watch list with fair value price range. It helps me develop my own understanding of what is good or what is bad. The only thing I look forward to is, when will price fall in my fair value range? I pray for stock to fall in that price range for me to have a buying opportunity. Needless to say, I have had plenty of buying opportunity in last few months.

What do you do to keep you distracted, or do get lost in the maze of closed channels?

reflection, stock picking