One of the biggest hazards of being a professional money
manager is that you are expected to behave in a certain way:
You have to come to the office every day, work long hours, slog
through countless e-mails, be on top of your portfolio (that
is, check performance of your securities minute by minute),
watch business TV and consume news continuously, and dress well
and conservatively, wearing a rope around the only part of your
body that lets air get to your brain. Our colleagues judge us
on how early we arrive at work and how late we stay. We do
these things because society expects us to, not because they
make us better investors or do any good for our clients.
Somehow we let the mindless, Henry Fordassembly-line,
8:00 a.m. to 5:00 p.m., widgets-per-hour mentality dictate how
we conduct our business thinking. Though car production
benefits from rigid rules, uniforms, automation and strict
working hours, in investing the business of thinking
the assembly-line culture is counterproductive. Our
clients and employers would be better off if we designed our
workdays to let us perform our best.
Investing is not an idea-per-hour profession; it more
likely results in a few ideas per year. A traditional,
structured working environment creates pressure to produce an
output an idea, even a forced idea. Warren Buffett once
said at a Berkshire Hathaway annual meeting: We
dont get paid for activity; we get paid for being right.
As to how long well wait, well wait
How you get ideas is up to you. I am not a professional
writer, but as a professional money manager, I learn and think
best through writing. I put on my headphones, turn on opera and
stare at my computer screen for hours, pecking away at the
keyboard that is how I think. You may do better by
walking in the park or sitting with your legs up on the desk,
staring at the ceiling.
I do my best thinking in the morning. At 3:00 in the
afternoon, my brain shuts off; that is when I read my e-mails.
We are all different. My best friend is a brunch person; he
needs to consume six cups of coffee in the morning just to get
his brain going. To be most productive, he shouldnt go to
work before 11:00 a.m.
And then theres the business news. Serious business
news that lacked sensationalism, and thus ratings, has been
replaced by a new genre: business entertainment (of course,
investors did not get the memo). These shows do a terrific job
of filling our need to have explanations for everything, even
random events that require no explanation (like daily stock
movements). Most information on the business entertainment
channels Bloomberg Television, CNBC, Fox Business
has as much value for investors as daily weather forecasts have
for travelers who dont intend to go anywhere for a year.
Yet many managers have CNBC, Fox or Bloomberg on while they
You may think youre able to filter the noise. You
cannot; it overwhelms you. So dont fight the noise
block it. Leave the television off while the markets are open,
and at the end of the day, check the business channel websites
to see if there were interviews or news events that are worth
Dont check your stock quotes continuously; doing so
shrinks your time horizon. As a long-term investor, you analyze
a company and value the business over the next decade, but
daily stock volatility will negate all that and turn you into a
trader. There is nothing wrong with trading, but investors are
rarely good traders.
Numerous studies have found that humans are terrible at
multitasking. We have a hard time ignoring irrelevant
information and are too sensitive to new information. Focus is
the antithesis of multitasking. I find that Im most
productive on an airplane. I put on my headphones and focus on
reading or writing. There are no distractions no
e-mails, no Twitter, no Facebook, no instant messages, no phone
calls. I get more done in the course of a four-hour flight than
in two days at the office. But you dont need to rack up
frequent-flier miles to focus; just go into off
mode a few hours a day: Kill your Internet, turn off your
phone, and do what you need to do.
I bet if most of us really focused, we could cut down our
workweek from five days to two. Performance would improve, our
personal lives would get better, and those eventual heart
attacks would be pushed back a decade or two.
Take the rope off your neck and wear comfortable clothes to
work (I often opt for jeans and a Life is good
T-shirt). Pause and ask yourself a question: If I was not bound
by the obsolete routines of the dinosaur age of assembly-line
manufacturing, how would I structure my work to be the best
investor I could be? Print this article, take it to your boss
and tell him or her, This is what I need to do to be the
Vitaliy Katsenelson (firstname.lastname@example.org) is CIO at Investment
Management Associates in Denver and author of The Little
Book of Sideways Markets.