The joy of not checking stock prices

I recently finished a wonderful book by Guy Spier, The Education of a Value Investor. In it, he spells out his own history as a value investor and highlights some of the ways he has set up his investing environment to make success more likely.

One of his best suggestions is to check stock prices as infrequently as possible.

This may sound like sacrilege to both professional and layman investors. “How can you react to the market’s ebbs and flows if you aren’t watching prices all the time?”

The answer is: you shouldn’t be reacting to the ebb and flow of prices. A focus on prices going up and down is a distraction to understanding businesses at a fundamental level. Only after you understand a business thoroughly–it’s competition, buyers, suppliers, management, potential rivals, possible substitutes–and have figured out what you think a business is worth should you look at the price.

I must admit, I have fallen into the trap of looking at stock prices too frequently. Doing so is very distracting. Instead of focusing on understanding a business and its value, you get dragged into looking at the stock price and begin to impart interpretations into why the price has gone down or up. Every moment spent trying to understand those senseless moves are moments not spent understanding the business.

I have gone the last two weeks without checking stock prices. That doesn’t mean I don’t have mechanisms set up to react to low or high prices on businesses I already understand, it just means I don’t look at daily price moves and how they compare to the market that day. The result is that I’ve gotten more fundamental research done and I feel more sober-minded in trying to understand the businesses I’m researching.

In time, I believe I’ll also have better investment returns to show for it.

Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.

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The joy of not checking stock prices

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