This article was first published in the National Post on November 12, 2022. It is being republished with permission.
by Tom Bradley
I’m suffering from digital fatigue. Maybe you are, too. Think about what’s competing for our attention: social media, website popups, news alerts, newsletters, calendar reminders, email notifications, Alexa, Siri, surveys on everything and ads everywhere. We also have endless entertainment options from traditional media, streaming services, podcasts and gaming.
Attention has become a scarce resource and gives second meaning to the term attention deficit. Meanwhile, everything I read suggests we need to go in the opposite direction. Dead time is the answer for creativity and problem solving.
Well, I can help, at least when it comes to your investments. Below are two lists. The first has things I spend little time reading about and contemplating. The second is where I focus. As you’ll see, I’m pretty ruthless, but hopefully there are a few ideas here to help manage your attention capacity.
Things to skim over or ignore
I don’t read market forecasts. These predictions aren’t worth the paper they’re written on and shouldn’t influence investment decisions. If you must, read them to learn about the underlying reasoning and ignore the conclusion.
I spend no time reading previews of big announcements or earnings releases. I’m not a day trader and would rather wait a day to see the actual announcement or a report by someone who has had time to fully analyze it.
I ignore explanations of why the stock market was up or down yesterday. Don Dillestone, a wily veteran on our research team when I started in the business, warned me that the media needed a simple narrative to explain what happened — a cause for every effect. But markets are driven by a multitude of forces, and their interactions are anything but simple.
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I’m very careful with the views of people who have an ax to grind. For example, predictions about the housing market from real estate agents go straight into the garbage.
Similarly, I tread lightly with cryptocurrency, gold and cannabis boosters. I’m repeatedly told bitcoin is the future, but not why it is, or what it’s worth. If there was a good explanation, I’d be more interested.
And I’m careful about commentators who recommend a new stock or strategy every week. Good investment ideas are precious, and trends don’t change overnight. I never know whether I’m supposed to buy this week’s recommendation or last week’s.
Things to focus on
I read everything I can about China. It’s been the world’s growth engine over the past two decades and will have no less impact in the next two, although likely for different reasons.
I was trained as an equity analyst and thought bonds were boring. Now I closely follow the credit markets because they tell me a lot about what’s going on in the capital markets overall: who’s issuing debt, who’s buying, changes in corporate spreads (the excess yield above government bonds), and how liquid the market is. I hate to admit it, but the bond market is often ahead of the stock market.
I look at every chart or table I can find on valuation. There’s no shortage of information about what companies do, but articles often miss the most important determinant of return — the price paid. Price-to-earnings multiples and discounted cash-flow calculations can get a little geeky, but they’re important. As American investor Howard Marks has said: “No asset can be considered a good idea (or a bad idea) without reference to its price.”
Speaking of Marks, I follow many investment managers. It’s remarkable how much they share about their strategies and what they own. And I don’t limit myself to managers who are performing well. The laggards provide the other side of the argument and tend to be more open about their investment thesis.
For example, it was the value-oriented managers who pointed out the lack of capital going into energy and resource projects during the recent tech boom.
And, finally, I pay attention to what my nephews and nieces are into. This might sound weird, but the reality is that we’ll all be doing the same things in six to 18 months. Think iPhones, texting, Lululemon, WhatsApp, YouTube, Facebook, Instagram, TikTok and shows such as Breaking Bad and Squid Game. They provide a sneak preview of emerging trends.
Which brings me back to the problem. You need to treat your time as a scarce resource and be proactive about managing it. Focus more on what’s important and less on what’s urgent. Who knows, maybe there’s an app for that.