How to Take Care Of Your Investments By Not Caring

Keeping up with business developments in the companies we own shares in is part and parcel of investing.

But if you start paying too much attention to certain things, it may end up working against you. My Foolish colleague Morgan Housel had explained this odd paradox in investing earlier this year:

“My journey started with a realization that the more media investors paid attention to, the worse they did. The more they analyzed, the more decisions they had to make. The more decisions they made, the more chances they had at being wrong, letting their emotions take over, and doing something regrettable.

Find someone who has mastered personal finance, and you’ll find someone with a pathological ability to not give a damn.”

Why we may want to care less

One of the main challenges in investing is really about knowing the kind of information or activity that we should focus on.

We may want to spend less time fretting about share price changes or looking for the perfect entry prices for the shares we’re interested in. Trying to guess what the next quarterly report will bring for a particular company may not help much either.

The activities mentioned just above are either centred on share price movements or short-term developments. There may be better things to focus on. Try looking at how much the revenue and earnings has changed for the business over a period of at least a year. You can also figure out if its balance sheet has improved.

Take Singapore Press Holdings Limited (SGX: T39), for instance. Shares of the newspaper publisher and property developer have declined by around 6.4% to S$3.92 (as of last Friday), over the past 12 months. That might seem like important information. But when taken alone, it actually tells us very little about whether the company is an investment opportunity or not.

If we dig deeper though, we will find that Singapore Press Holdings’ profit has declined by 20.4% year-on-year. The company’s traditional media segment continues to struggle as it transitions into a digital-based platform. On the other hand, the firm’s balance sheet managed to strengthen over the past year. These business factors may be better things to care about.

Foolish takeaway

When it comes to investing, the less we take care about the unnecessary, the more we set ourselves up to make the right decisions. When our thoughts are less cluttered, we stand a better chance of looking at an investment for its true merits and care less about the fluff around it.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.