Stocks are uniformly up today, which means I don’t have anything to do. What I’m finding is that doing nothing is really hard for me. I have a bias for action. I want to be doing something each and every day. Perhaps that is how I was able to be an entrepreneur, I feel a need to do something.
This inclination for action is something I am learning to fight. At a time like this, I am unable to find any new stock positions to take because the market values the companies higher than I do. That doesn’t mean the market is wrong and I’m right, but it does mean that if I were to do something, anything, on a day like today, then I’m not investing based on my ability to determine what companies are worth, I would be investing based on what the market thinks a good price is.
You aren’t going to beat the market by throwing away your judgement in exchange for its.
So now I’m writing a blog post, partly as a distraction from watching stock prices continue to uniformly move away from the price I am willing to pay. I have to deal with thoughts in my mind like “maybe these stocks never fall to the price I’m willing to pay”. “Maybe I can’t find any good deals for three years”. “Maybe the next time MSFT is anywhere near fair value, it’ll have grown 100% and I should have just bought it now?”. These questions are legitimate thoughts. They could even end up being true. But I have to remind myself that acquiring long term positions is going to take time in this market. I also have to remember there are lots of great stocks out there.
Sitting in cash for the foreseeable future is going to be painful. I have a bias for action and my mind will do its best to trick me into paying a premium for stocks, just so I have something to do. It’ll also trick me in to exiting stocks early so that I am not watching the price go down. While I have no easy solution to this, I think the best I can do for now is remember I have this bias and trust my valuations of companies and resist paying a premium.