We all have different objectives when we enter the marketplace. Let’s remember that. No two participants should have the exact same time horizon or reasons for being in the market in the first place. Not to mention, there are different markets and asset all over the world, not just US stocks. There are investors and there are traders. There is a huge long-term buy/hold, 401(k), dollar cost averaging group of people, and there are folks who can’t (or refuse to) think past 4PM on any given day.
So before you enter the marketplace, make sure you understand what your time frame is. When you’re surfing the web and reading the news and/or blogosphere, make sure you know the time frames and objectives of those who you are reading. Otherwise, you’ll just be wasting your time arguing and disagreeing with someone who is doing or talking about something completely different than what you might want to be doing.
I’m guilty of this myself. I have friends that run Investment Advisories and barely make a trade. They just buy and hold and if the market dips, they’ll just buy more and reallocate accordingly. Their objectives are completely different than mine. So to argue with them about what we’re trading after an FOMC decision is a waste of time: they don’t care – but I do. Other times they’re talking to me about decade long trends and I just roll my eyes and change the conversation. Why? Because we have different time frames and objectives, so why bother?
A lot of times I’ll write a blog post or make a comment on tv about a specific stock or asset class. As a manager whose goal it is to make money for investors every single quarter, I can’t worry about long-term trends. I’m trying to make money now. And I try to do a good job of explaining that this is what I see now, and what I’m looking at now. Still, I get emails and comments about Warren Buffett’s returns back in the early 80s. Because, you know, that has so much to do with what today’s $BRKA rolling correlation looks like compared to the S&P500.
So ask yourself, what’s your time frame? What are you goals? What about the person who wrote what you’re reading: are they a trader? a journalist? an investor? a CEO of a publicly traded company? an economist? a college professor? a College kid just trying to learn? Are you two on the same page with the same objectives? Chances are you’re not. But the information is important to you anyway, otherwise you wouldn’t be reading. And that’s okay.
Finally, try not to get too caught up with what others are doing. Worry about yourself and your goals. Because remember, if you’re an investor, it shouldn’t matter what day traders are doing or think about the market. If you’re a day-trader, you shouldn’t care about long-term views and secular shifts across asset classes. One has nothing to do with the other.
So let’s get the week started right. Know who you are, define what your goals are, and stick to it. I’ll try my best to do the same.