How many of you have you have tried losing weight? I believe most of you have… for health, to look better or to be able to wear that nice looking shirt or dress that you have just bought not long ago.
Personally I have been trying very hard to cut down on my weight for health reasons and while doing so, I came to realise the special “likeness” between losing weight and investing.
For those who have watched the MediaCorp’s recent advertisements on their channels going digital, you might have seen this 2014 advertisement of one of their artistes, Suhaimi Yusof, actively trying to lose weight by running around the track. After each round, he would be weighing himself on the weighing scale. During one of the rounds, he realised that he had gained a kilo when he was weighing himself and was asked by the trainer to go for another two more rounds.
For those who are interested in the advertisement, I have also embedded the video below. Thank you cocofunz91 for the video uploaded on YouTube.
So what is the special “likeness” between losing weight and investing?
I believe most of you who have been through any kind of losing weight program would have gone through weighing yourself once or more a day and I am very sure that there will be a few times you will see that your weight did not drop (or even worse, rises) from the last time you weigh yourself 24 hours or less ago. After a couple of days resisting the food temptations and dragging yourself to the gym, you might feel like giving up when you see that your weight did not drop much.
Similarly in investing, I do see those around me, constantly looking at the stock charts every hour especially when the market is not doing well. The bad market days will tempt them to exit a trade when they see that the stock in their portfolio dropped 1-2% that day, totally forgotten on why they had bought the stock in the beginning. Worse still, on good market days when the stock they are holding rise 3-5%, they may exit the trade prematurely only to regret the next day, or even the weeks to come, when the stock bagged another 3-5% daily.
The Bottom Line
Do not get me wrong. I am not advocating that we should not be watching our portfolio everyday. It is still important to keep a constant watch on our eggs in our investment basket. Exit signals, fundamental and technical, may come anytime of the day while you are at work or even when you are sleeping. Keeping a constant lookout for exit signals at the right timeframe and do not get overly concerned when the market is not doing well or the stock is doing exceptionally well. Remember why you had included the stock into your basket in the first place and only take it out when that reason does not hold anymore.