Yes - I know that trying to time the market, pick individual stocks and beat the index over the long long term is insanity. There is plenty of literature that shows it takes 30-40 years to "prove statistically" that your performance is better than just passive investing in a total market index.
Albert Einstein said " Insanity is doing the same thing over and over again and expecting different results. Sort of like the early rounds of Bll Murray in the 1993 movie Groundhog Day. As I said to Mark Longnecker at lunch - market timing is a LOSERS GAME.
My early performance (while not 30-40 years) may be part of the statistical literature. Since I keep meticulous records (although past tax returns are the best source), I have 20 years of data. While my net performance including today's unrealized capital gains is positive the revealing issue is the amount of time I have spent investing over that 20 years.
Since 1989 I have 2,585 round trip trades. I have had countless legal mailings from either bankrupt companies, shareholder suits etc. etc. I have recorded hours of transactions in software, spreadsheets, turbo tax. I have journaled my trading history and analysis in no less than 15 - 100 page notebooks. I would estimate over the 21 years I have spent over 9000 hours of time looking at the market and doing my personal investing (much more recently).
When I put that amount of time into the equation and put it into an hourly rate I am making about what a decent programmer would make knocking out code.
So a rational person would say - the return on your time is ridiculous. You should passively invest and use your time in higher yielding activity. That same person (not me) would say Practice what you Preach.
And that person is sane :)
Thursday, November 5, 2009
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