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Three Steps to Cure a Stock Market Addiction

Here’re some simple questions for you. Do you have a watch-list of stocks you are interested in? Do you have the list in all your mobile devices? Do you check the prices of those stocks every time you have a minute to spare?

If you do, you might have what I call the “Ticker Tape” syndrome. A ticker tape is the display tape that is constantly running through the bottom of most financial news channels like CNBC or Bloomberg.

Having a “Ticker Tape” syndrome means that you have the continuous desire to know the price of a stock at any moment in time, even when you are not planning to buy or sell any. Truth be told, I was once a “Ticker Tape” addict too. But I realized, being one means that all we’ll become is just a person who knows the price of everything but the value of none.

Time is valuable too

For a “Ticker Tape” addict, you must have realized at some point in time that an obsession with tickers is extremely tiring and a huge waste of time.

Having done little or no prior research about a company before getting addicted to checking its share price, how would you even know if the company’s share price had dropped to a very attractive level in relation to its business fundamentals?

Thing is, in some ways, a “Ticker Tape” addiction is no different from other addictions such as gambling, smoking, or even needing to check your emails constantly. And like all addictions, it has to be dealt with or it might cause more problems for you in the future. In the process of dealing with an addiction in checking stock prices, it’s likely you’ll realise an important benefit: The amount of time you’ve freed up to pursue all your other interests in life.

There is a way forward

There are a number of steps you can take to get rid of the addiction.

1) First of all, you will need to delete from your watch list, all the stocks in which you have no real knowledge about their businesses or value.

2) Next, create a circle of competence in companies which operate in businesses that you understand. Ensure that all companies that are in your watch-list are companies that you have done research on and have a rough gauge on their intrinsic business value. This can help you determine an attractive price for investment in each share.

3) Lastly, instead of constantly checking on stock prices, create a price alert that will inform you when any particular share has dropped to your desired price range. Today, many brokerage firms’ online systems allow us to create such alerts. You could even ask your broker to keep you informed if you’ll like a more manual way of doing things.

Foolish Bottom Line

Hopefully, the steps outlined above will improve the efficiency of your investment process and ensure that you are not spending time on the wrong stuff. After all, time is the only commodity that we can never ever earn back. We should use it wisely.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.