This Is 1 Thing You Should Stop Doing To Invest Better

In his 2007 book Your Money and Your Brain, author Jason Zweig highlighted a key discovery on how our brains recognise patterns:

“It’s vital to recognize the basic realities of pattern recognition in your investing brain:

a) It leaps to conclusion
b) It is unconscious
c) It is automatic
d) It is uncontrollable”

Said another way, our brains are wired to recognise patterns. Most of the time, this characteristic is a useful mechanism for our day to day survival. If we see a car coming our way, we would want to move away as soon as possible to avoid getting hit.

But when it comes to investing, this automated mechanism could become a bane. This is especially true when we stare at stock prices that can change from second to second. Following Zweig’s lead, it is possible that changing stock prices will have us jumping into incorrect conclusions – even if we have no intention of forming any conclusions.

So, the one thing we can stop doing to invest better is to look at stock prices all the time. Instead of focusing on stock prices, our time could be better spent looking at the businesses behind a stock ticker.

For instance, if an investor is interested in the telecommunications sector in Singapore’s market, he could spend his time studying the annual reports of M1 Ltd (SGX: B2F)StarHub Ltd (SGX: CC3), and Singapore Telecommunications Limited  (SGX: Z74). He could also listen to the telcos’ earnings conference calls or read their quarterly reports.

The more time we spend away from stock prices, the better.

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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.