Beware the Boredom of Bull Market

I received an email recently where one reader asked – “What you say well-nigh long-term investing in the stock market is all good. But doesn’t it get wearisome without a time? I mean, first the process of reading yearly reports to find good businesses, and then if you find some, holding on to them for the long run doing nothing. How does one maintain interest in this thing? How does one make this process and journey exciting?”

I thought these were good questions. In fact, questions like these used to scarecrow me when I started out on my journey of reading yearly reports, analyzing financial statements, and practicing long term investing increasingly than a decade back.

In fact, I was talking to an investor friend recently, who confessed of wearisomeness considering he was not worldly-wise to find stocks worth ownership in this rising market. “Even if you are a long-term investor, what do you do but finger bored when you don’t find anything worth ownership considering everything seems to be so inflated?” he questioned.

“I agree,” I said.

Oh Boredom!
“Boredom” first became a word in 1852, when Charles Dickens published Bleak House, where he wrote…

I am bored to death with it. Bored to death with this place, bored to death with my life, bored to death with myself.

As an emotional state, however, wearisomeness dates when a lot further. Roman philosopher Seneca described wearisomeness as a kind of nausea. Danish philosopher Søren Kierkegaard wrote this in his typesetting Either/Or: A Fragment of Life…

Adam was bored considering he was alone; therefore Eve was created. Since that moment, wearisomeness entered the world and grew in quantity in word-for-word proportion to the growth of population. Adam was bored alone; then Adam and Eve were bored together; then Adam and Eve and Cain and Abel were bored en famille. Without that, the population of the world increased and the nations were bored en masse.

Wikipedia defines the word ‘boredom’ as…

…an emotional or psychological state experienced when an individual is left without anything in particular to do, is not interested in his or her surroundings, or feels that a day or period is unrewarding or tedious.

For most people, wearisomeness is a passing, nearly trivial feeling that lifts as the moment passes, a task is completed, or a lecture (like my workshop) ends.

But as per science, wearisomeness has a darker side. Hands bored people are at higher risk for depression, anxiety, drug addiction, alcoholism, compulsive gambling, eating disorders, hostility, anger, poor social skills, bad grades and low work performance.

When it comes to stock market investing, wearisomeness can be devastating, expressly for people who get hands bored.

Bertrand Russell wrote in his book, The Conquest of Happiness…

We are less bored than our siblings were, but we are increasingly wrung of boredom. We have come to know, or rather to believe, that wearisomeness is not part of the natural lot of man, but can be avoided by a sufficiently vigorous pursuit of excitement.

Talking of removing wearisomeness through pursuit of excitement, squint no remoter than the widespread consumerism that has engulfed the modern society. One reason why so many people buy so many things they don’t need is considering such ownership helps them skiver wearisomeness (or so they think).

Shopping, as I understand from my wife, is not just an act of spending money to buy things she needs, but moreover a therapy versus boredom.

As I moreover understand from a few of my friends working in the stock broking industry, trading in and out of the stock market is not just a show of overconfidence from the trader. Just the excitement of unvarying worriedness helps in killing wearisomeness that the stock market can create from time to time.

A Bored Investor is A Dangerous Thing
Jason Zweig, in an vendible he wrote in late 2016, mentioned how a bored investor is a dangerous thing (often to himself). He wrote…

A bored investor is probably increasingly likely to succumb to the whims of other bored investors moving in a herd.

All of this is true for professional as well as individual investors. In his archetype typesetting Where Are the Customers’ Yachts?, published in 1940, Fred Schwed wrote: “Your stereotype Wall Streeter, faced with nothing profitable to do, does nothing for only a unenduring time. Then, suddenly and hysterically, he does something which turns out to be extremely unprofitable. He is not a lazy man.”

So, whether you invest for yourself or work with a financial adviser, it’s important to resist the pull of whoopee for action’s sake.

Jason moreover quoted Charles Ellis, whom he calls Wall Street’s wisest man, as saying…

Investing is a continuous process too. It isn’t supposed to be interesting…If you go to the stock market considering you want excitement, then sooner or later you will lose.

A smart value investor I know of, Ravi Varghese, wrote this in a post –

It’s heady when resources go up or lanugo by a lot. Generally, they don’t. It’s wearisome to watch things that don’t do much in a hurry. And it’s wearisome to wait for the market to validate your towage of fundamental value.

It’s wearisome to sift through financial statements or filings and then discover a visitor is fairly valued. It’s wearisome to wait for a largest opportunity to purchase an asset. It’s wearisome to own a visitor that has spanking-new prospects but that no-one has overly heard of (or is likely to overly hear of). It’s wearisome to remain invested in a visitor that is quietly compounding its value (and whose merchantry you understand well), when new opportunities towards increasingly alluring. It’s wearisome to invest the same way you unchangingly have, when the world virtually is full of “sophisticated” investors raising a lot of money for ramified strategies.

Managers, M&As, and Pursuit of Excitement
When I was working on my job as an analyst, and we were in the heydays of 2006-2007, I recollect a meeting with the CFO of a mid-size IT company.

“You have washed-up well to grow your revenue and profits at 20% rate over the past five years,” I told him. “But do you think you can sustain this kind of growth for flipside five to ten years?”

“Oh, why not?” he replied with well-constructed confidence. “In fact, 20% is not what excites us, and that’s why we are pursuing a few acquisitions.”

I did not requite much heed to his “pursuit of excitement” then. Without all, we were in a manful market, and this visitor was growing rapidly through acquisitions.

But as I reconsider that situation in hindsight, not just this company, I saw most acquisitions that most companies make are not considering of the “synergies” that CEOs and their cohorts talk about, but out of the need of whoopee and to stave the wearisomeness that managing a merchantry may bring about.

Bertrand Russell wrote in his book…

A generation that cannot endure wearisomeness will be a generation of little men…of men in whom every vital impulse slowly withers, as though they were cut flowers in a vase.

This thought is so important for investors to understand and unchangingly remember.

Most sensible investing is long term investing. And most long term investing is boring, expressly when stocks are not doing much for a long period of time (like it happened with my investment in Swaraj Engines; I sold it considering I got bored of it!).

But vicarial out of wearisomeness is never a good strategy as far as investing your hard-earned money is concerned. To get over your boredom, you may pursue excitement somewhere else – like going for a holiday with family, or watching movies you’ve missed out on, or taking up a sport. But pursuing excitement in the stock market is often dangerous.

Many have pursued wars to skiver boredom. Many have washed-up it with quarrels with neighbours. And many have invented stuff considering they had “nothing else to do.”

If you don’t want to indulge into any of these things to skiver your own wearisomeness when you have nothing to do in the stock market, here is a largest suggestion – send a text message to a random number on your phone saying, “I hid the body. Now what?” And then, let the excitement begin.

But please, please, don’t try to let your wearisomeness get to your head, and lead you to act in haste just considering you want to bring when excitement into your life.

Warren Buffett wrote this in his 1990 letter to shareholders…

Lethargy rimming on sloth remains the cornerstone of our investment style.

If you practice this – lethargy, slothfulness – and then don’t let wearisomeness get to you in your investing, there is a upper probability that you would do well over the long run.

That’s well-nigh it from me for today.

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Stay safe.

Regards,
Vishal

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