I believe that without good breaks from the daily focus on spreadsheets, charts and news an individual investor (and possibly institutional investors) can hurt their longer term investments. As most part-time investors will attest, investing can be mentally draining endeavor. I work full time (although not very hard lately), invest part-time and try to maintain a basic exercise routine. I’m married and have a 3 ½ year old son too. I try to keep a balance in my life with all of this on top of staying in touch with friends. Occasionally I feel one of my interests taking a stronger foothold over another and I use holiday weeks like last week to mentally recharge and refocus. For most of last week and even the end of the week before, I didn’t spend much time reading about stocks and missed a few extra days of blogging. I had a relaxing break and spent some good, quality time with my family and friends.
Taking a break and recharging like this even when not on an actual vacation gives me a better long-term focus on my goals. It’s like stepping back from the trees to see the forest. If I stay deep in there too long I tend to lose my vision of where I need to be longer-term and find myself worrying too much about short-term losses. I believe a lot of people who are new to investing become overwhelmed because they think they have to spend all of their time reading about investing and if they dare take time off they’ll lose everything. This can end up keeping someone from investing in stocks completely and can force then to the devil (aka mutual funds).
One realization I’ve finally come to grips with (again) is that my approach to selling covered calls the way I’m doing it in my IRA is not working well for me. I’m up over the past year, but not anywhere close to what I’m doing in my taxable account and even worse, I’m below the benchmark averages for the year to date and also for trailing 12 months. I’m going to try a new approach in my IRA and not sell as many covered calls, but try to focus on holding positions for longer or at least for bigger gains on each position. Not being able to use margin in my IRA is what has held me back the most I think. If a position moves ITM before expiration I end up starting the next period with too much in cash and waste too many weeks trying not being fully invested. I’ve touched on this theory before, but now I’ve accepted it.
Without taking the time to recharge I might not have taken the time to really analyze what I’ve been doing and what’s been working or not working as much. If I hold positions longer in my IRA, I can focus even more time towards my taxable account which seems to be taking more time to manage as my balance grows. Of course, that’s a good problem to have. I don’t think my head is completely back in the investing world yet, but maybe I just need some more coffee.
Good luck to all of you as we can really kick off the second half of the year now that the holiday week is complete.
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