Saturday, June 21, 2008

* Can You Walk Away From It?

Addiction can be a powerful thing. According to Wikipedia, addiction is a term used to describe a devotion, attachment, dedication, inclination, etc. Nowadays, however, the term addiction is used to describe a recurring compulsion by an individual to engage in some specific activity, despite harmful consequences to the individual's health, mental state or social life.

I think it is safe to say a lot of people are addicted to micro-managing their portfolio. It's not that they check the results each day, but they'll keep their portfolio open in a browser to monitor it throughout the day. In the short-term, markets can behave very irrationally. If you are constantly watching your portfolio, this can lead you to act out of emotion - e.g. sell a good security at a bad price or buy a good security at a bad price.

The cure? Do your homework and select solid companies with a proven track record. Watching every up and down tick of good companies like Aflac (AFL), General Electric (GE) and Johnson & Johnson (JNJ) will not help your portfolio's long term-performance.

One test of addiction is can you walk away from something without withdrawal? During my vacation last week I thought it would be an interesting test to see what I could and couldn't walk away from. On the positive side, I did not check my portfolio a single time. I did not even watch the news to see what the markets did.

Being an admitted workaholic, I did check emails and voicemails multiple times a day. This was no surprise. However, I have identified a new addiction - my blog. In spite of having a full weeks worth of posts scheduled ahead of time, I checked my blog as much as I checked my work emails and voice mails.

Hello, my name is D4L and I am a blogaholic...

Related Articles: