The Most Important Metric of Returns (You Will Be Surprised)

Many times, people measure their investing returns in terms of their dollar returns - there's nothing wrong with that.

However, very few investors, talk about how much time they spend on the stock market in order to make those returns.

That's right - I am talking about the return on invested time.

The Purpose Of Investing

I probably talk about this quite often to my newsletter subscribers, and it is this quote:

Many times, I see "investors" spending countless hours on the stock market, just to watch share price movements...

Or they spend hours reading news about Trump, and gossiping to their friends and family about what's happening lately - and explaining to them how it will affect the stock market.

Here's a graph that I did to explain the harsh reality.

What most investors seem to believe is that the more time they spend reading the news, and staring at the stock market - it will help them improve their investing returns.

The fact is that most of the news out there are just distractions...

Look at this for example.

Now, I have nothing against the US President.

But please remember that as investors - we are business owners.

Let's try to put on the hat of Jeff Bezos, the CEO of Amazon.

Do you think that when Jeff reads this news, he will be like:

"Shit, the president got tested positive for COVID, our revenue for the upcoming quarters are going to fall!"

Well, chances are that the Trump's incident had little to do with the Amazon's business!

This is why I hardly read the news, because most of the news out there are just gossips that have little to do with the company's fundamentals.

What about these news?

Some of you might be thinking, 

"Gin, some news are not gossips! They really do have an impact on the company's business!"

And I agree - there are useful news out there that suggests the business could be affected.

Here's an example.

If Facebook were to quit Europe, I am sure that a portion of Facebook's revenue will be affected.

If that is so - what will you as a shareholder of Facebook do?

Will you choose to trust the management of the company to make the right decision for the business?

Or will you get worried, and choose to sell your shares?

Remember that when we invest in a business, we are also investing in the management of the company.

Just like how if you invest in Berkshire Hathaway, you are also investing in the Warren Buffett and his team's competencies to compound your money.

The way I evaluate a company's management has been rather straightforward.

I am not saying that this is the best method - but it worked well for me.

And that is look at the company's track record in terms of its finances.

Why?

Because management can make empty promises.

However, if there is a certain track record in the company's numbers - I am more inclined to believe that the management is doing well.

(This is also why I always use the 8-Point Checklist before I invest).

Build Systems & Processes

Time is precious - so try not to waste so much time, especially just looking at share price movements.

There is no meaning in looking at share price movements - just let the market do what it wants to do.

And if you want truly want to spend lesser time on the stock market - so that you are not exchanging time for money, you need to build up systems and processes.

For example:

Every investing decision has already been pre-decided - and that is why I hardly spend any time on the stock market. Because I have a system in place to help me with my investing decisions.

And all of these information are already organized in my Stock Investing Hub.