We have all heard of Attention Deficit Disorder – which refers to the lack of an ability to concentrate on an activity or task – something on the lines of low attention span. I have often been (and I guess a lot of individual investors will also identify with it) a victim of what I will call here as Attention Surplus Disorder when it comes to investments.
This is the state in which you pay so much attention to your investments (than is necessary) that it leads you to take actions that you should not or would not ordinarily take – if you were not paying surplus attention. With all the business newspapers, television channels, stock tickers, online portfolio statements, websites and email, there is a high likelihood that a lot of investors (and I refer to people who honestly start with an intention of long term investing, and not traders or speculators) are victims of attention surplus disorder.
A majority of the financial services industry and its revenue is essentially based on two sources: One is the size of your assets, and Two is the amount of your transactions. A third source, in a few cases, is a percentage of your profits. Most constituents that ordinary investors deal with make money based on a percentage of either of the first two. It is in their interest, therefore, that you either suffer from or are made to suffer from Attention Surplus Disorder – in the hope that you will then be motivated to do something that leads to either newer assets or newer transactions.
So all the clutter (a.ka. analysis, views, news or similar) to get your attention to your portfolio and to the markets – with new technical and fundamental analysis everyday, how which stock is best to sell now or buy now, or how some mutual fund beats the index this month, quarter or year versus some other last year, month or quarter; or how you should add new asset classes to or change your asset allocation of your portfolio – and much more – are all essentially noise that gets your attention, and leads you to become a sureshot victim of attention surplus disorder. It is likely to take an ordinary investor a lot of education first, and then a lot of will power and discipline next, to get himself into a position where he escapes becoming a temporary or permanent victim of attention surplus disorder.