The Subtle Art Of Doing Nothing
Being the start of the year people are now dragging their heals back into work. The school drop offs are in full swing and most of us are trying to remember what we promised to do before scooting off in December. Myself - it certainly has been difficult to get into the swing of things after 5 weeks off. My time off was not without its challenges also. I am someone who needs to be mentally stimulated on a regular basis. I can only do so much laying around before my laptop comes out and I begin the deep dive into property research, investment forums and financial markets. I know.. riveting stuff hey!
Anyone who follows the property market has seen recent price growth occur on almost a national scale. Pundits and predictors are out sprouting their bold predictions for 2021 and there is a severe case of FOMO starting to set in. Similarly we have seen share price growth, the dramatic rise and fall of stocks and now the Reddit army revolting on GME (google it!). During this volatile time so much focus is put on Action. There is so much emphasis placed on purchasing, buying, selling and off-loading. Decision making is the "sexy" part. It is when we put our cards on the table and back our decision whether that be to buy or sell. It gives us that euphoric rush if we feel we have made the "correct" choice or that horrible, gut-wrenching, anxious feeling if we have made the "wrong" one.
But what of the other decision? You know the one that no-one gives a shit about? What about the decision to do nothing at all? Zip, Nada, Nothin'! Well it most often gets pushed to the back. Please don't confuse this with doing nothing in relation to your wealth creation. In fact there is always something we can be doing. Whether that be educating ourselves, saving regularly, research, etc. However, I am referring to the impulse decision making that is quite prevalent currently. I am not sure if Covid induced lockdowns have played their part but this environment feels like one big game of musical chairs. People jostling for their seat, falling over eachother for the next rung on the ladder. The human desire to do something has taken over and price volatility has added to the itch.
One attribute I've learned over my investing years is to have a high "boredom threshold". Regarding property, unlike shares, there is no daily price tracking. Can you imagine if there was a digital sign out the front of your house displaying the daily price movements both up and down! Most people only come to realise the value in their property when the market is moving. News articles begin popping up either positive or negative which triggers an emotional decision to start investigating prices and (depending on circumstances) asking the question of buying and selling. There has been numerous times I've gone through this stage in my own journey. Seeing prices move and getting the itch to do something. Asking questions like "is now the best time to offload", "should we upgrade", "wow if I sold now I would have $X in the bank", "man - imagine how many Ducati's I could buy with that moolah!". But after these emotions have passed and I calm down I return to the fundamental reasons as to why I invested in the first place. Let me tell you I've had these thoughts numerous times over the last decade. Let me also tell you that as of today I am extremely happy with my decision to do sweet F All.
One of the keys to wealth is becoming completely comfortable with your decisions during volatile times. Everyone speaks about not panic selling during a downturn but what about not panic selling during enormous growth times? There is a reason for the price increases. Demand is outstripping supply. You must back your decision regarding fundamentals. Will you be able to handle a 30% rise followed by a 15% fall? The buying and selling is the easy part. Its the boring period in the middle that really tests your emotional stability and investment strategy.
Remember - Short term performance is never linear. But long term it more than often is!
- The Tattooed Investor