Читать книгу Ignore the Hype - Brian Perry - Страница 17

All around us, people seem busier these days. No one wants to wait for anything. Heck, between online shopping and delivery drones, we can get almost anything we want within 24 hours. For those unwilling to wait this long, 3D printing technology may soon allow instant home fabrication of a variety of goods.

And let me ask you a question about smartphones. The last time you waited in line for a movie, concert, Disneyland ride, or grocery store checkout, how many people in that line weren't multitasking on their phone, whether with social media, online shopping, or texting? My guess is not many. For better or for worse, our society has evolved to the point where patience is a very rare quality indeed.

This mentality extends into the financial arena: no one wants to invest their money and patiently wait for it to grow over the course of years or decades. No. We all want to trade, Baby, so let's light this candle and make a bundle fast.

How could we not, when the headlines are full of stories about Wall Street whiz kids who make millions a year and teenage tech entrepreneurs who make billions from their parent's garage? Never mind the bad old days, when wealth was generated over the course of decades through a combination of hard work, saving, and investing.

Since 1960, the average holding period for a stock has declined from eight years to eight months. Let me state unequivocally: an eight-year holding period constitutes an investment, whereas an eight-month time frame is a trade. And as I'll emphasize again and again throughout this book, there are fundamental differences between trading and investing.

The rapid pace at which many people turn over their portfolios is the antithesis of ignoring the hype and sticking with a long-term plan. But admittedly, the evolution of the financial markets has made it harder and harder to stick to a long-term approach, as evidenced by the decline in average holding period for a stock purchase.

Figure 1.1 shows some of the changes that have occurred in the economy, the financial markets, and the world. Many of these changes are net positives for you as an individual investor. But, as with many things in life, these changes represent a double-edged sword because the same developments that provide benefits also exacerbate the urge to give in to instinct and emotion and to do something.

Figure 1.1 How the World Has Changed for Individual Investors

SOURCE: Analysis by Brian Perry.