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A colossal waste of time, but it's fun

Introduction: Michael Batnick is a US author, podcast host and Director of Research at Ritholtz Wealth Management, focussed on developing risk management and portfolio strategies for the firm’s clients. He writes a regular newsletter under the name The Irrelevant Investor.

A recent edition struck me as highly relevant to many of our readers who wonder whether they should manage their own investing, follow market experts or just put their money in a diversified fund and focus on something else.

***

An email came in tonight with the subject line “You’re my Rukeyser.” It’s a lovely email, filled with life lessons. I wanted to share it, and not just because it paints us in a good light.

I’m a 56-year-old college professor who grew up watching Louis Rukeyser on Wall Street Week with my Dad every Friday evening. Now I listen to you two. I can’t believe the amount of outstanding content you produce, and I wanted to thank you for your contributions.

I thought an outstanding point in a recent “listener mailbag” was about the difference between “reading” through historical data and “living” through historical data. There’s no substitute for experience.

I’ve been an active investor since I was in graduate school, and I tell my students today that the mistakes I made managing a $3k portfolio have helped me now that it is many times that. But what I tell my children is different – buy target date funds and never look at the balances.

Yes, it’s a hobby, but when I think of the mistakes I’ve made:

-Selling Nvidia in 2008 to pay off my house
-Failing to execute on Apple at $17 because I thought it would go lower
-Panic selling in March 2020

They aren’t balanced out by the successes I’ve had. Every major purchase (my house, my cars, vacations, etc.) I buy with cash from the profits from stock sales. This makes them 'free' – literally – everything I own is because someone was wrong and sold me a security that increased in value. That gives me some comfort, but in the end, I wish that I had just put everything into Vanguard funds instead of reading about nanotechnology stocks, FOREX trading, crypto, and every other investment fad since 1989. It’s been a colossal waste of time.

But you two aren’t wasting your time (or mine). Your insights, humor, and friendship are infectious, and I look forward to hearing (and reading) your insights into markets and life.

Thank you for the hours of joy you’ve provided me and the rest of your readers and listeners. You two never discuss “bond ghouls” or where the elves see the market going, but you’re my Rukeysers – trusted voices in every market environment.

The reason I shared this email, and again the praise doesn’t hurt, is because I want to talk about that line, “It’s been a colossal waste of time.”

I think I know what this person means; had he just used a couple of index funds, he would have come out financially ahead of where he is today. There’s no doubt, that for most people, most of the investments you make today will be better served in an index fund. When viewed through a financial lens, then sure, most of the earnings calls you listen to will be a waste of time. Most of the articles you read won’t provide you with any real insight. Most of the charts you go through will provide a false sense of security. But does that really mean it’s all a waste? All of it?

The thing that really interests me, which I’ve written about before, is who gets to decide what’s a good use of your time? You today, or you in the future? Does regret later in life supersede how you felt at the time? And this is where my brain starts to hurt; Sure, you’re the same person, but you’re a different version of yourself. And again, I ask, which version gets the final say? My kneejerk reaction is to favor our older self. But you only got wiser and a better perspective on things because of the mistakes you made along the way.

This email made me think about how I’m spending my time. I’m not a great example because a lot of what I’m doing is in service to the podcast. Like, would I trade stocks and buy NFTs if I wasn’t sharing it on the show? Hard to say with certainty, but probably not.

It’s likely that I’ll look back at this point of my life with financial regret. Why don’t I just put all my money in index funds and do literally anything else with my time?

Because I enjoy it. It’s fun. I may not be maximizing my money, but that’s never been my primary motivation. I should point out that I’m eating my financial vegetables. I max out my 401(k), I auto contribute to various accounts. I can afford to speculate with a small portion of my money.

Time is the most precious resource on earth. It must be protected at all costs. So I understand where this listener is coming from, and I might agree with him when I’m his age, but right now, I don’t view this as a waste of time. A waste of money, perhaps, but not a waste of time.

Maybe I grow out of it, and if and when I change my mind, I will change my habits. But until then, I’m going to stay overweight today. Basically all my money in the stockmarket is in index funds. I don’t trade stocks in any meaningful size.

 

Michael Batnick is the Director of Research at US-based Ritholtz Wealth Management LLC. For disclosure information please see here. This article is general information and does not consider the circumstances of any investor. Republished with permission.

 

8 Comments
c
February 27, 2022

About 50% of my portfolio are LICs and ETFs. I buy and then hold for a long time. Yet, I can immediately think of 5 stocks that would have been more than $100k each now if I had not sold them. Having learned my lesson, this time around I am using BBOZ to hedge.

I realise that most people here are few years older than me and some are ex find managers. Just wonder if anyone of you have bought or planning to buy tech ETFs? They are looking interesting?

Chris
February 26, 2022

Investing can be alot of fun provided you are using money you can maybe afford to lose.What annoys me is people who seem to affect the market by shorting stocks and also those fools who buy and sell stocks for short term gains which usually results in share prices going drastically up or down regardless of the results of company reports.It certainly makes for unique buying opportunities for long term(5 year plus) investors however I think it would have been more enjoyable 20 years ago before all this algorithm stuff started

Adrian
February 26, 2022

Yes for most people definitely just go with a diversified index option and do something more meaningful and better with your time. For those that are genuinely skillful and enjoy it then sure why not. It's not a complete waste of time if you learn something such as about emotions, fear and greed, ego and how to align your time and energy with what you value.

Gary
February 25, 2022

Great article, has made me feel more comfortable with the time l spend on researching and buying stocks which is more like a hobby now even though the greater part of my portfolio is in Index funds.

Antoine
February 23, 2022

I've just about convinced my kids to save much as possible, invest in index funds and spend time on the important things in life.

Dan
February 23, 2022

When I was a decade out from retirement I did exactly this. Redeemed all investments and unsubscribed from countless investing subscriptions. I put all proceeds into my Super accumulation account and switched the investment strategy to 50% Aggressive and 50% Growth. Then I watched my balance double in 7 years, so retired early. As a relatively young retiree, I now approach my income stream the same way. I reckon I have 25 good years ahead so why even bother with capital defensive options? I sleep well at night.

Jack
February 23, 2022

After decades of managing my own investments in an SMSF, this is exactly how I feel. Some winners, some losers, I'd have been better putting it all in a fund and doing something else. It has became more something to do that something I enjoy.

John
February 24, 2022

I am a big fan of Josh Brown & Michael Batnick on The Compound (YouTube). I am retired and have 66% in blue chip stocks that I don't touch & that funds my retirement. I have 25% in growth stocks that I research, buy on dips etc and have a lot of fun with, and they have been great performers. None pay dividends yet, but some have more than doubled, some underwater but pay day is 4-5 years away. If you enjoy the game and don't play with the financial foundations, it can be time well spent

 

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