How to Be a Better Investor: Do Nothing
Once you have set up your stock and bond portfolio, avoiding further action is the most important and also the hardest task, our columnist says.
By Paul B. Brown
My father was one of the smartest people I have ever met.
He was also among the dumbest investors.
The two facts are related.
He went to N.Y.U. on a full scholarship, finished in two and a half years and taught cryptology in the Army after graduation — and was convinced he could outsmart the stock market.
Dad was always buying penny stocks of companies that would “change the world” or investing in dubious tax shelters that always seemed to trigger an I.R.S. audit, and he was convinced that he could time the market.
One reason he was so frenetic in his trading was he had time to do it. He held senior marketing positions in several major insurance companies, jobs that he didn’t find particularly taxing and that gave him plenty of free time, and he often used it to “play the market.”
I am nowhere near as smart as my father. But now, like him, I find I have free time during the day because I realize I’ve got enough money stashed away to be able to cut back on my workload.
And because I like business and finance, I find myself spending more time paying attention to what is going on in the market. I will see or read something intriguing about the transportation industry, for example, and say to myself, “I wonder if I should buy X.” And then there will be a feature on an up-and-coming online retailer and I’ll go: “I should keep an eye on it and maybe buy on a dip.”
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