Investing means so many different things to different people. One person will call something investing and another could call it gambling. Outside of the financial world it means, “to put money, effort, time, etc. into something in order to improve it or get an advantage”. Some key words in this definition is effort and time.
If we are honest with ourselves, effort and time is not something that we like. We want things to happen quickly with as little effort as possible. The irony is that we all know quick and easy usually is not very good. For some reason we do not care and continue to pursue quick and easy.
When it comes to investing, quick and easy is certainly not your friend. There are tons of research to support this and I will provide some links at the end to reference. When it comes to investing, time and effort go hand in hand.
Warren Buffett has a famous quote on time. It goes, “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes”. He even proved his point when betting a hedge fund that he would beat them by investing in an S&P 500 index fund over a 10 year span. Buffett crushed them. If you are not familiar with what hedge funds are, they basically buy and sell regularly. This is a gross simplification of a complex strategy, but it is the opposite of what Warren Buffett generally does.
Now on to effort. Keeping the theme of Buffett, it takes patience and discipline. He has strict guidelines before investing in a company. If it does not meet his criteria then he is fine with waiting or passing it by. Now ask yourself, how often do you say no to something you want? For most of us, the answer is rarely. It takes a lot of effort to calm our thoughts down enough to put things in perspective. Often times we rationalize, or rationaLIE, to ourselves so that we make it ok to do something.
The point of this is to not say that Buffett is superior to everyone else with picking stocks. The opposite is true. Warren Buffett understands that he can not predict the future and is often times incorrect. When it comes to investing he uses discipline and time to his advantage.
Basically, if you are constantly changing based on current news and trends then you might be gambling more than investing.