Wednesday, August 10, 2016

Are You Good At Ignoring People? You'll Probably Do Well In Investing!

When I was writing up the post for my June 2016 Goal Update, I was surprised to discover our net worth had increased by over $10,000 that month. When I looked into it, I discovered most of that gain had come from our investment accounts.

That was a total surprise to me. I was actually thinking our net worth might have dropped that month. A few days earlier, the Brexit vote had passed and stock markets all over the world dropped. Here in the US, the Dow Jones index dropped by 610 points (3.4%) and the S&P 500 dropped by 75 points (3.6%). The next day, the Dow continued it's drop, going down another 261 points. But I never bothered checking my accounts to see how they were affected. My coworkers a couple cubes over were bemoaning their loses and saying they were going to sell their mutual funds and wait until the market came back.


By the end of the week, the Dow had recovered almost all of those losses. If my coworkers did sell their mutual fund shares, they sold low and, to get back in the market, they had to buy high. They're doing it wrong.

I was only dimly aware of the market gyrations. I heard about the Brexit vote and I knew markets around the world dropped, but I had no idea how much, nor did I care. In the days following the vote, I made no effort to see how much the market lost and I did not check my account balances. In fact, I didn't even know how much the market dropped until I sat down to write this article and had to look it up. The whole thing just didn't even register with me.

I've learned to tune out news of daily market gyrations.

Becoming Good At Tuning Things Out

I work with computers and, although it is not the main focus of my job, occasionally I have to do some programming. I'm one of those people that requires a modicum of quiet to get detailed work like programming done. It's difficult for me to concentrate in a noisy environment - or at least, it used to be.

Several years ago, I worked at a job where I shared a small room with two other people who liked to play music while working. Being the newest hire, I felt I couldn't really ask them to change their work environment just for me. Instead, I learned to tune out the music.

It wasn't easy and it took a while, but when I needed to concentrate, I eventually became able to tune out the music and concentrate on whatever task I needed to do. Not everything required such high levels of focus, but when it did, I was able to go to the quiet place within my head, even while music around me blared. I like to call this selective concentration.

That turned out to be a useful ability to develop. I now work in an company with an open-office floor plan - one big open area where you can hear everyone talking. Supposedly, this encourages teamwork and better communication amongst workers. (In reality, it creates all sorts of problems and actually decreases worker productivity.)

To survive in such an environment, being able to tune out others is invaluable. I don't always succeed, and I still find I am most productive in the hour or two I am at work before the rest of the employees arrive. However, learning to tune out people in the work environment has had a huge positive impact on my work productivity. In a wonderful bit of serendipity, it has also led to advantages in other area - investing.

Financial Noise

The best way to creating wealth through investing is a buy-and-hold strategy. To be successful at this, you need to be able to weather wild swings in the market and ignore the talking heads on financial news shows expounding on how dire the situation is.

It can be difficult at times, I admit, especially if the downturn goes on multiple days or even weeks. But one thing to keep in mind is that news is now a 24 hour a day business. Media companies need to sell ads, which means they need viewers. That means they need to constantly keep you watching. One way to do that is through hype and sensationalism. The media does their best to convince you that every little thing is of utmost importance and you need to keep watching to stay informed or you will be left behind.

Once you understand their motivation, it becomes easy to ignore their cries of panic. You realize it's just a form of clickbait.

It's OK To Ignore People

So do your best to become a little anti-social and develop the ability to tune people out. A good way to teach yourself this skill is to try reading a book while the television is on. When you can read a chapter or two and comprehend it without being distracted by the TV, you've got it. Then move on to reading while your spouse is talking. (Just kidding!) You'll find selective concentration becomes easier the more you practice.

Now take that skill and apply it to the stock market. Learn to ignore the day to day fluctuations in the market and your portfolio. Take a long term view. Internalize this mantra: You can't time the market. Tune out those talking heads who tell you otherwise.

You'll end up thousands of dollars ahead of those who can't.


  1. It takes time, but most of us realize at some point in our lives that most people, most of the time, have no idea what they're talking about. They're just talking. :)

  2. I've totally bought into the not timing the market mantra. Slow, consistent investment into low cost index funds. It's really almost boring but I keep 2 individual stocks that I bought trying to time the market (AXP and BABA) to remind me that it's usually doesn't work. My index funds are definitely beating my stock picks. Tuning everything else out.

  3. Kevin - I hear ya! I moved all my investment accounts into index funds with the exception of one stock that I buy purely for the extremely stable dividend (it's a REIT), not price appreciation. I've been very happy with the performance of the index funds over the last couple of years.

  4. Buy and hold is the best strategy. Fidelity did a study best performing portfolios were from dead people who either didn't leave them to somebody or they hadn't been accessed
    The second best performing portfolios were those that had been forgotten about