Apprenticed Investor: Time Won't Wait
As we mentioned previously, you are competing against some of the smartest and best-equipped traders in the world. They work 24/7 to uncover an edge. These are people who are at their trading turrets at 5:30 a.m., who work 12-hour days doing the same homework that you might be spending a few hours a week on.
If the guy on the other side of the trade -- the sell to your buy -- is spending far more time investigating a given company, sector or market, that stacks the odds against you.
A key question all investors must ask themselves is, "Does my investing style match my available time?"
If you find yourself somewhat harried when it comes to your investments, the likelihood is that you have too little time for your adopted style. Your options are simple: find more time or adapt a style more suited to your time available. For most people, that means shifting to an investing style that is less time-consuming.Many find this adjustment to be uncomfortable. That is often because they are trading for the buzz, and not the long-term return. The solution to this is to turn 5% of your assets into your mad money (pun intended). Put them into a separate account at a different broker. Manage this for fun; manage the main account with a deadly serious purpose.
Matching Your Investing Style to Your TimeTo determine how much time you should spend managing your own financial affairs, ask yourself the following questions:
|Got the Time?
Estimating time requirements for the most common investor styles.
|Spectrum of Investors||Time Required||Success Depends|
|Buy & Hold||Minimal||Cycle driven (bull or bear mkt)|
|Hiring Money Manager||1 hour per month||Varies by mgr, plus quarterly updates and annual reviews|
|Mutual Funds Holder||5 hours per month plus quarterly reviews||Market driven, plus mgr's skill level|
|Indices/Sector Funds||10 hours per month||Market driven, plus timing|
|Individual Stocks (long-term holders)||20 hours per month||On stock selection and trade management|
|Individual Stocks (med-term trading)||10 hours per week||On trade entries and exits, and position sizing|
|Short-term Trading||20-40 hours per week||Cash management|
|Source: Barry Ritholtz|
|1.||Expect to Be Wrong||2.||Your Fault, Reader|
|3.||The Wrong Crowd||4.||Bull or Bear? Neither|
|5.||Know Thyself||6.||Prepare for Battle|
|7.||Bite Your Tongue||8.||Don't Speak, Part 2|
|9.||The Zen of Trading||10.||The Folly of Forecasting|
|11.||Lose the News||12.||Tracking Elephants, Pt 1|
|13.||Tracking Elephants, Pt 2||14.||Nothing Doing|
|15.||Surviving Silly Season||16.||The Zen of Trading|
|17.||Curb Your Enthusiasm||18.||Six Stocks|
|19.||Bended Knee||20.||Time Waits for No One|
|Check back for more of Barry Ritholtz's
Apprenticed Investor series
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