The professional basketball players of the NBA have twenty-four seconds to drive the ball up the court and take a shot.
If they fail, the ball goes over to the other team.
So the closer the shot clock gets to expiring, the more desperate the offensive team is to shoot the ball — and it seems the less likely they are to make it.
As a result, just about the entire forty-eight-minute game is played at a furious pace, with both teams racing up the court and running quick plays to try to get a man open before the shot clock expires.
Fortunately, there is no shot clock in investing.
So-called once- in-a-lifetime opportunities appear, amazingly, many times in a life- time.
But a lot of investors play the investment game as if they have a twenty-four-second shot clock to beat. Cash burns in their pocket.
A comment I’ve heard repeatedly from novice investors is, “I have some money lying around; I want to do something with it.”
My response to that line of thinking is to always ask the simple question, “Why?”
After leaving a perceptible silence, I’ll follow up with, “How?”
To your credit, if you have money lying around, that means you’ve been frugal enough to save some money and wise enough to realise that you did not need to invest that money immediately.
Speed is not a positive attribute in investing. In fact, my experience has been that those investors who trade the most tend to do the worst over the long term. Investing will always be a game of patience. It requires a well-conceived strategy. Spend some time to plan out your investment strategy and determine the best use of that money, and then begin your strategy slowly and thoughtfully.
Every dollar you add to your portfolio should be invested with a certain purpose. Your entire investment portfolio — including your 401(k), your house, your stocks, bonds and mutual funds, your insurance products and annuities, your real estate, your gold, silver, and jewellery — should all fit comfortably together like a carefully constructed jigsaw puzzle.
Excerpted with permission of the publisher, Greenleaf Book Group Press, from “Dear Investor, What the HELL are You Doing?: Smart and Easy Ways to Fix the Mistakes You Make with Your Money” by Ken Weber with Gene Walden.