This post was written by Tony.
I was recently reading Timothy Ferriss’s book titled “4 Hour Workweek”. Here are is the main thing that we can take away from this book.
You need to make more efficient use of your time, because you only have 24 hours a day. Cut out all the non-core stuff that takes up your time. 80% of the results are done with 20% of the effort.
I’m not going to get into more detail about the book (because I would be spoiling it), but here’s how you can use your time more efficiently to produce better investment returns.
- Don’t subscribe to too many investment newsletters. I know there are tons of appealing newsletters asking you to suscribe, saying “See my secret portfolio that yields 1000% plus annual returns!” In fact, don’t bother subscribing to newsletters that tell you what to invest in. Always do your thinking for yourself. Subscribe to 1 or 2 irregular newsletters that provide a detailed analysis of what’s going on the the financial markets right now. For example, the only newsletter I subscribe to is GMO’s quarterly newsletter. Reading too many newsletters takes a lot of time, and taking too many market opinions into account can clog up your thinking.
- I know some people who love waiting for the latest piece of financial data (e.g. jobs report, unemployment index, this index, that index). Waiting (and getting excited) over upcoming financial data only wastes time. What difference does it make? Reading financial data doesn’t tell you what will happen. The data is about what happened in the past, and has already occured.
- That being said, the only two pieces of news I read is the BusinessInsider Before Opening Bell Summary and After Closing Bell Summary. These two pieces of news give me a good overview of what happened in the day, because that’s all I need. Sticking around on news sites for hours a day hoping to find new information takes way too long.
- Don’t read too many financial blogs and websites. Pick out a few of your favourites, and stick to those. Reading takes time, and information overload is not a good thing.
- To further save time, consider suscribing to the RSS feeds of your favourite blogs/websites. Doing so helps you avoid searching around on that website for the information you need. In other words, you get what you want delivered straight to your inbox.
- Focus on fewer investments. Ever heard of “sometimes less is more?” Do not take every single investment opportunity that presents itself. Wait for the best one to appear, and grab it by the neck. Patience. Sometimes, I’ve waited months with 100% cash, just for the right moment when the markets are ready for some severe profit taking.
- If you really don’t have the time to be a full time, short term investor, then the answer is simple (you probably already know what it is). Be a long term investor. Be a long term investor that sticks to long term market movements. Too many self-proclaimed long term investors end up using short term trading techniques. Stick to what you can do, not what seems seducive.
- Also, avoid watching financial TV. I know Jim Cramer’s show may seem appealing, but financial TV is like seducive sex. 99% of the stuff presented on there is garbage (but still attracts the masses), and the good, useful information can already be found on the internet by the time it’s on TV.
- Avoid the gossip columns. There are forums and comments sections and gossip clubs that encourage their members to discuss their market outlook. Those are mostly a waste of time (unless you can get into Jim Roger’s gossip club), and most people who participate in those clubs don’t know what they’re doing (or at least pretend like they know what they’re doing).
So, are you going to make the most of your time when it comes to investing? I hope so.
I’m subscribed to this post, so if you have any comments, I’ll be sure to comment back!
I agree that you can waste your time by reading TOO much. But even with saying that, I am surprised by how much more knowledgeable I am after reading a lot about a company. Like you said, it is much better than TV that is just trying to hook you in for more.
But you have to read the right stuff too. A lot of business news websites thrive on rumours, whereas others like CNBC state clearly which ones are fact, opinion, and rumor.
I think this is an important point when it comes to investing: “Always do your thinking for yourself.” It’s too easy (or sometimes tempting) to get caught up in suggestions from others. I know I sure don’t have the time to be a short term investor, so I am sticking to long term.
Sometimes we get lazy, and would like to outsource our “thinking” to others.
That is so true. What a waste of time watching financial news tv. Speaking of Cramer, many people say they make good profits by always doing the opposite of his recommendations! Thanks for this reminder to not waste time! It’s the one thing we only have so much of!
Lol. I’ve heard of that too. But sometimes he’s right (he has connections alright). But then again, if you guess 100 times, you’ll at least be right 40 times.
I hate the financial news on CNBC. These people are nuts. Also, you can’t really trust things like Money Magazine either. My uncle, out of the blue, was asked to be a contributor.
Wow. That’s pretty funny. I use CNBC just for knowing what the official news is. A lot of news sites mix up opinions with rumours with fact, so you don’t end up knowing which is which.
That’s the danger of information overload and the way to easily deal with it is simply to index your portfolio and the problem is solved!
I completely agree with your recommendations. At the risk of shameless self promotion, read my free ebook, 20 minute guide to investing for the easiest way to invest!!!! (it’s on the top right of my site)
lol, Barb. I’m heading over to check it out.
Great advice. People outsource their thinking because if it goes wrong, they can blame someone else. “Kramer got it wrong. CNBC made the wrong call.” If you are investing, you should have the final say. Who would care more about your money than yourself?
You hit it spot on, Buck. No one is more responsible for your own money than yourself.
Great post! I love that book and think the 80/20 rule definitely applies to just about everything. I am not subscribed to many financial reports, but definitely need to select a few strong ones and just focus on building my understanding of the market and investments I want to pursue.
Thanks! I agree too. I was reading it, and when I got to the 80/20 part, I was like “wow”. This is the most important thing right here.
-Find your investment’s style.
-Do your own research.
-Test the research.
Yep. That just about sums it all up.
Nice solid article. One thing you need to do is stop listening to everybody and do your own research. It is your money and you need to take responsibility for it.
I find it funny that people routinely trust other people with their money without giving it hardly any thought.
They are more interested in what is for dinner or what’s on TV.
I totally agree. It is amazing how careless people are with their money and yet they complain they don’t have enough.