Thu. May. 15, 2008

To Infinity and Beyond! *

My kids are now 13 and 11, and Disney is no longer cool. What a shame. I miss the movies like Toy Story and the quips aimed at the adults. One of my favorites was Buzz Lightyear’s line “To Infinity and Beyond!” My kids were toddlers when we first watched Toy Story and they had no clue what that line meant and the impossibility of achieving it.

Have you ever pondered the concept of forever or infinity? It is truly mind boggling! What is even more astonishing is that when I buy a stock, my target holding period is forever. For most people, myself included, that is hard to grasp and to carry out. When things start going bad, our primal instinct of flight kicks in and we want to sell. In many cases that is the time to be buying.

How do you lose weight? Exercise and eat less. If it were that easy everyone would do it. In the same manner, the experts will tell you, don’t watch your long-term portfolio every day. Again, if it were that easy everyone would do it. So what’s person to do. Counter-balance the urge to watch and manage your portfolio on a daily basis. In my life I have found the following two techniques to be quite effective:

  1. Find somethings investing related that will pacify that need to watch and manage your portfolio on a daily basis. For me, I direct this energy into two primary pursuits 1.) financial blogging and 2.) stock analysis. Both give me the feeling I am doing something to help my portfolio, without me having to sell and buy stocks. Neither may be suited for you. You might prefer reading about stocks and investing, discussing it online, etc.
  2. Invest in good solid dividend stocks. Day-to-day movements in dividend stocks have never bothered me. Whenever a dividend stock drops without a change in its fundamentals, I get excited because as price drops, yield goes up! It may seem odd, but I have actually been disappointed when a price rose and the yield dropped below my target level.

Experiment with the above and I am sure you will find ways to curb those desires for daily portfolio monitoring and management. If you’ll excuse me, I need to go for a run so I’ll quit thinking about that pizza in the fridge.

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7 Responses to “To Infinity and Beyond! *”

  1. TylerDCA says:

    Not to be a pain, but Toy Story was a Pixar film before it was associated with Disney…

  2. MG (moneygardener) says:

    So true D4L! I find that the same types of things tend to pacify me. Dividend increases, buying on dips, and watching the soap opera that is the stock market, and blogging about it are good cures…

  3. passivefamilyincome says:

    Nice post D4L. I am very guilty of trying to manage my long term portfolio on a day to day basis. I actually just started my new blog last week (www.passivefamilyincome.com) just to prevent me from over-managing my portfolio. Hopefully it will allow me to stay focused on my long term goals. I also trade options to hedge against my portfolio to prevent me from getting in and out of stocks on dips and peaks. I know – that is over management but it is a start.

  4. Nurse B, 911 says:

    Excellent post. I discussed the aspect of discipline a little while back and I think it has a serious effect on new investors who can’t help but try to micro-manage their investments to attain higher short-term gains. The benefit of the dividend strategy is the passive element that helps an investor sleep at night.

  5. SavingDiva says:

    I’ve avoided micro managing my accounts, but I also have avoided dealing with it! I have a defunct mutual fund that I purchased about 10 years ago. I recently redistributed my retirement accounts into mutual funds that make sense…I’m a mess!

  6. Dividends4Life says:

    TylerDCA: You are correct that Pixar was was an independent co. when Toy Story was made. However, Disney paid for it. In 1991, after substantial layoffs in the company’s computer department, Pixar made a $26 million deal with Disney to produce three computer-animated feature films, of which Toy Story was the first.

    MG: That’s the beauty of dividend investing. It’s good whether the market is up or down!

    passivefamilyincome: We’ve all been there. A blog is a great outlet!

    Nurse B, 911: You are dead-on. It doesn’t matter what my portfolio does in the short-term, because i am in it for the long haul.

    SavingDiva: I guess there is a happy medium in there somewhere. It sounds like you’ve got a handle on it now!

    Best Wishes,

  7. Lulugal11 says:

    I like your idea of buying and holding because I am getting ready to cash out some CDs that I have with ING.

    After reading this post I am rethinking this and I might renew some of the CDs.