“Information overload” is something most university students have experienced. Especially during those long research projects that drain the life out of them. I genuinely believe that a lot of information is making me stupider. Okay, that is incorrect. It delays my decision-making.
I was contemplating about how easy it was for people back then to make an investment. They probably had one trusted source of information. Therefore, they were more certain about the information they received. In this time of constant flow of information, we are disadvantaged. I am an avid reader and an enthusiastic student however I sometimes find myself uncertain about the accuracy of the information I am absorbing or if it has some bias. This applies heavily to information I look up on the internet. My naiveté may be projecting here and I should be more critical of the type of information I intake. Despite that, it is hard to filter out the noise from everything I read.
The more research I do, the more dazed I get. During the time I decided to buy a camera and have a hobby outside university, I was certain that I wanted to get a DSLR. However, since I was unsure about the brand to purchase, I went to my source of information (google). I looked up people who had an idea of an appropriate camera to start with as a beginner. I was bombarded with comparisons of brands, pros and cons. Everything was attractive. I was probably drawn in by promotions too. My decision-making process about a simple camera took longer and eventually I settled for the camera I initially wanted.
I should have picked up a book on photography where I would not have been bombarded with a lot of advertisement. This is a valuable lesson. I have to figure out a way to learn more and avoid noise in a world where there is a cacophony of information.
Fixation, for me, is when my mind anchors to an attractive stock from Company A and uses it as a scale to measure the worth of Company B. My judgement becomes distorted and biased and I cannot seem to research untouched by the impression Company A gave me. It seems that I have already made a choice before I have already gone through all the options I have. It’s an immense flaw in judgement that I would like to get rid of.
I have gone through the Australian Stock Exchange (ASX) website to compile all the health care stock that are listed on it in order to choose one that trumps all of them. I don’t know if this is the right way to do research, but I have yet to come across a website that mentions the research processes that experienced investors use to sort through the many companies they hear of.
I am going to deviate from the topic of this article and clarify that my goal, for the moment, is to try everything until I find a method that works for me. I want to be more fluid in learning and be able to abandon a strategy that does not work for me. I believe everyone should not to be too rigid with their plans. If something does not work, it is justified to try something new. Being obstinate may be a flaw in this world.
After compiling all these companies, I highlight the ones that seem most appropriate to me and focus on them. I visit to their websites and learn everything I can about them. (Honestly, it takes me a while to read about one company because I have to refer to my fundamental analysis notes repeatedly.) When I come across Company A, with its attractive financial statements, my mind fixates on it and even when I move on to Company B and attempt to be more rational in gauging its worth, Company A is still stuck on my mind. It’s like that prediction a psychic tells you that you try to rebel against but end up molding yourself around.
I hope with time I get better with compartmentalization and sorting the longer I do this. I may have to chase rationality throughout this process.
I bought my first ETF on impulse. I could lie and say that I did a lot of research before purchasing it but all I looked at was the expense ratio and the ETFs top holdings, which are all popular and well-known companies.
One thing that fascinates me, which I thought of after buying the ETF, is the fact that my mind was fixated on ETFs just from reading all the praises about them. I could justify myself by saying that since they are on every investment website I visit, it was hard not to be swayed.
I thought the first investment I would make would be thoroughly researched but I guess I am more impressionable than I initially thought. I am too trusting of people smarter than I am, I guess.
I am very lucky in the sense that my investment is showing an impressive upward trend. It has a few blips here and there, of course. My confidence would have taken a hit if it had gone in the opposite direction. Nothing is certain in this world. That fact has been drilled into my head for the past few weeks. For all I know, the ETFs worth may plummet tomorrow.
I am struggling to set investment goals. When it comes to making such life changing decisions, I am the embodiment of the words unsure and doubtful.
I used Vanguard‘s online template as a starting point to learn how to set clear, precise and realistic investment plans. The site has a sample layout of well-defined investment goals that I used as a guide to set up my own plans and strategies.
Writing a plan was harder than I anticipated. I had to ask myself the real reasons for my interest investing. It became something akin to soul-searching because I had to dig deep inside me in order to put everything on paper (word document, I mean).
My goals, compared to that thought-out template, seem too elaborate and unattainable. I have numerous goals that I am using as a set up for the type of investments I want to make. Moreover, each goal has an action plan set to achieve it. My document is more that 3 pages long and it gets longer every time I revisit it. It seems incomplete every time I read it. Will I ever finalize it?
There is a lot of emphasis on the importance of setting clear goals that you can follow for you to be more successful with everything in life. I wonder, however, if plans should be more dynamic to allow for growth. Of course, I may be saying this because I want to justify changing my plans all the time.
I wish I could talk to someone who has experience in the business of investing. Preferably someone with more than 30 years of experience. A person who has survived all the market cycles without losing too much. I could buy a book and learn from its author, but it is different from having a face to face conversation.
I have set a hurdle to go through three Introduction to Investment courses before I begin investing. Moreover, I am simultaneously researching companies that I might start investing in once these specific classes are over. I have to refer to Investopedia a lot for the latter activity.
As I research companies, I have bouts of excitement when I come across a company I like. There is a voice in my head that nudges me to invest in Company X before I know much about it. I am struggling with this irrational impulse to purchase stock in Company X immediately.
I am determined not to make an investment without knowing the company I am investing in as well as its policies and missions. As one can tell, I am studying Fundamental Analysis. I am driven to know what I am investing in and to know if I am making the right choice for myself.
I fear being too excited and thoughtless enough to actually purchase a stock. I don’t want to crash and burn before I even start. I want to learn as much as I can to take, what the gurus call, a “calculated risk”.
I have come up with a satisfying way to deal with my need for activity in my investment account. When the Australian markets close on a Friday, I order the shares of Company X and this temporarily curbs my urges. On Sunday night, I retract my order and by that time, I have calmed down. I have no idea if my actions will have any long-term consequences. For all I know, I may be causing the computers to overheat. As usual, every time I write an article, I come up with a new question.
I am hoping the reader might have a better way to resist the temptation of buying stock impulsively.