Sunday, April 26, 2015

The Stock Market is a Giant Distraction

“The stock market is a giant distraction to the business of investing.” - Jack Bogle
Earlier this week, I was thinking back on my baseball card collecting days as a kid and how each month my neighborhood friends and I would get a copy of the Beckett price guide and check the value of our favorite cards.

The prices went up, went down, or stayed the same, but a monthly quote was sufficient.

I can only imagine how much of our childhoods we would have wasted had there been a live quote feed for card prices...

"Barry Larkin went 3-for-4 with two RBIs last night; his 1987 Topps card is up five cents today in heavy trading..."

As silly as that sounds, we have no problem doing something similar as adults with our stock investments, spending time on our smartphones and computers watching green and red real-time price quotes that tell us next to nothing about how the underlying business is performing.

As long-term, business-focused investors, of course we want to know when the market is offering attractive prices for good companies, but there are ways to keep up without being glued to the quotes screen.

My favorite way to do this is to set up price alerts on your favorite financial website. Yahoo! Finance, for example, has a tool that lets you receive an email whenever a stock reaches a certain price point or rises or falls by a certain percentage.

The stock market is a wonderful instrument that matches buyers with sellers in a very efficient manner, but it's important to remember that it is a means to an end and not the end itself. It's a tool for us to use to our advantage when we need it. The more time we spend researching businesses and the less time on watching the quotes screen, the better off we'll be in the long-run.

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Stay patient, stay focused.