The Amateur Investor Ep. 14: A watched pot

There are mornings where I wake up feeling a little behind the eight-ball and find myself rushing about, filled with not a small amount of regret at all the things I should have tackled earlier but didn’t because I let myself get distracted with other things or procrastinated actually implementing the strategy for execution. 

It’s something I’ve found myself suffering from increasingly with age, and in the time of COVID-19, this small urge towards doing things has become something of a roar more often than not. In a number of circles, particularly leadership psychology and corporate governance, this is known as action bias; a tendency towards favouring action over inaction, even if that action might not be the best course. Very often it’s driven by the need to feel like you’re doing something to improve the situation, rather than letting the situation develop. I’ve studied it over a number of years through a bunch of different careers; debt management, crisis management, non-profit advocacy, outdoor recreation. It’s everywhere, because people are people. Very few people are immune to it, panic is a human emotion and most will do anything to stave off its grip. In a few cases it can be good, especially when actions are driven by good information, training and practice.

Here’s a little update on my last position. Right now I’m working to lessen my exposure in a number of positions, I’d gotten a little too excited and gotten a bit further in on the market than I’d have liked, sitting at roughly 5% over what my comfort zone is. A few of those positions have since taken a drop by a couple of points, which haven’t been good to watch at all. All told I’m about 6% down in my whole portfolio, which is the biggest drop it’s ever taken. The other Mockers have doubtless taken bigger hits, by virtue of having been in the market longer, but for me it stings a touch.

The plan now is to essentially fight my urge to action-bias and wait.

That’s it.

There’s no special trick. 

Bill, our blog’s IT guy and recent birthday boy (Happy Birthday, Bill), shared with me in one of our meetings that some of the losses I’d taken in my holdings were not that bad and that maybe getting out of them before things moved might be a good idea. Another contrarian in the group counselled holding, the mainstay of every long-hold investor, and waiting for the dips to turn. So I split the difference and started putting in conditional orders to shorten the larger positions, moving them down to 10% at the max, 5% at the minimum. There are a few long play positions I have to re-evaluate as well, to make sure the percentage committed is appropriate, they’ll probably get a trim as well. 

Don’t do what I did guys and gals, just play small, go slow, learn the process.