Investing in stocks is not a science. It’s very subjective. But does that make it an ‘art’?
A key question I pose in my book, Customize Wall Street, for buyers of stocks to ask themselves, is: “Am I an investor, or am I a speculator?”
No matter how you respond to the question, the process of selecting stocks and mutual funds is subjective. You can treat it like running a business, or you can treat it like going to a casino. This applies to individuals like us as well as experienced institutional portfolio managers. As with music, painting, and writing, anything that is primarily subjective can be viewed as ‘art’. Even stock investing can indeed be a thing of beauty, especially ‘in the eyes of the beholder’. You, as an investor, will know whether you’re happy with your stock selections or not. If you are, then it’s a work of art for you.
An important part of stock investing is to not judge the ‘beauty’ of your investments by the ups and downs of the stock market. You don’t judge the beauty of your art collection or your favorite music by weather conditions outdoors. Although we never enjoy it, when the stock market drags down the prices of our stocks, it doesn’t mean our investment decisions were not sound. Stated in another way, it’s important to know what we can or cannot control with stock investing. We cannot control the state of the economy or prices of stocks. What we can control is which stocks we choose, the amount of information we gather, the dollar amounts we invest, and how long we keep any particular stock in our portfolio.
We can also control how we treat distractions. Unique in the world of stocks (and commodities) is the bombardment of continuous price quotations all day long. I strongly recommend that you treat this phenomenon as a distraction to be ignored as much as possible. Price quotes are valuable when you are making buying and selling decisions. They are unnecessary every minute of every day. We do not encounter such frequent price quotations in any other facet of our lives. Our homes, our paintings, our jewelry, even our family businesses are not appraised minute by minute. Ignoring price quotations, except when needed, might help greatly in reducing the stress of our stock investing.
In summary, many variables are the same in creating music or painting, as in stock investing. Be disciplined, be consistent, and have confidence in your own judgement. This is true even when running your business or household. This should likewise be true when saving and investing for your retirement, or any other financial goal.
I discuss these and other ideas in my book, all designed to reduce the stress of saving and investing, when making investments offered by Wall Street.
Yes, I believe there is an ‘art’ to stock investing!