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Here are four ways embracing my ADD has helped make me a better investor.
I only buy kittens if I’m willing to own cats. Cute kittens turn into cats. Cats have to be fed regularly, they have kitty litter boxes that have to be cleaned and they need to be taken in periodically for routine medical checkups. Like kittens, most investments ideas are exciting at first but every investment requires at least some amount of time on an ongoing basis. If I’m not willing to spend the time on something in the future, I’m not willing to spend the money on something today.
I trade less. In comparing a typical research report to a meal, the first page or two would be fun for me to consume (the desert) but every page afterwards would be more and more difficult to digest (brussel sprouts anyone?). After reviewing my historical returns, I found my best performers were the companies where I had read every page of the reports and truly understood what I was buying rather than just skimming the press releases. If I’m not willing to read every page, then I won’t buy it. If I’m not buying, then I don’t need to sell and so I trade less.
I delegate better. I was fortunate enough last year to be introduced to an amazing corporate bond investor. His expertise is buying bonds heading into and/or coming out of bankruptcy. No matter how hard I tried, I just couldn’t stay focused long enough to learn and understand all the capital structures, nuances and abbreviations of this market. Instead, I just hired him to manage that part of my portfolio.
I spot flaws in stories easier. Companies commonly use stories to help sell a brighter future (we are the next Google) or explain away the recent past (sales fell because of bad weather). One way I’ve embraced my ADD is by reading 40-50 newspapers/websites/magazines on a daily basis. The advantage this gives me is a much wider range of data points to compare to the story the company is trying to sell. Restaurant Company A press release said their new strategy is working because same store sales were up 3% but restaurant industry magazine reported average same sales in that sector was up 4% mostly due to higher food prices.
