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Beware the Boredom of Bull Market

At my Hyderabad Value Investing workshop that I conducted last Sunday, I had a participant who asked – “What you’ve said about long term investing in the stock market is all good. But doesn’t it get boring after a time? I mean, first the process of reading annual 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 bother me when I started out on my journey of reading annual reports, analyzing financial statements, and practicing long term investing more than a decade back.

In fact, I met an accomplished investor friend at a conference recently, who confessed of boredom because he was not able to find stocks worth buying in this rising market. “Even if you are a long-term investor, what do you do but feel bored when you don’t find anything worth buying because 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, boredom dates back a lot further. Roman philosopher Seneca described boredom as a kind of nausea. Danish philosopher Søren Kierkegaard wrote this in his book Either/Or: A Fragment of Life

Adam was bored because he was alone; therefore Eve was created. Since that moment, boredom entered the world and grew in quantity in exact 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. After 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 dull or tedious.

For most people, boredom 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, boredom has a darker side. Easily 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, boredom can be devastating, especially for people who get easily bored.

Bertrand Russell wrote in his book, The Conquest of Happiness

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

Talking of removing boredom through pursuit of excitement, look no further 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 because such buying helps them kill boredom (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 also a therapy against boredom.

As I also understand from a few of my friends working in the stock broking industry (yes, I still have a few friends there), trading in and out of the stock market is not just a show of overconfidence from the trader. Just the excitement of constant activity helps in killing boredom that the stock market can create from time to time.

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

A bored investor is probably more 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 classic book Where Are the Customers’ Yachts?, published in 1940, Fred Schwed wrote: “Your average Wall Streeter, faced with nothing profitable to do, does nothing for only a brief 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 action for action’s sake.

Jason also 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 because you want excitement, then sooner or later you will lose.

A smart value investor I know of, Ravi Varghese, wrote this in a post on his blog…

It’s exciting when assets go up or down by a lot. Generally, they don’t. It’s boring to watch things that don’t do much in a hurry. And it’s boring to wait for the market to validate your assessment of fundamental value.

It’s boring to sift through financial statements or filings and then discover a company is fairly valued. It’s boring to wait for a better opportunity to purchase an asset. It’s boring to own a company that has excellent prospects but that no-one has ever heard of (or is likely to ever hear of). It’s boring to remain invested in a company that is quietly compounding its value (and whose business you understand well), when new opportunities appear more alluring. It’s boring to invest the same way you always have, when the world around is full of “sophisticated” investors raising a lot of money for complex 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 done 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 another five to ten years?”

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

I did not give much heed to his “pursuit of excitement” then. After all, we were in a bull market, and this company 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 because of the “synergies” that CEOs and their cohorts talk about, but out of the need of action and to avoid the boredom that managing a business may bring about.

Bertrand Russell wrote in his book…

A generation that cannot endure boredom 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 always remember.

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

But acting out of boredom 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 kill boredom. Many have done it with quarrels with neighbours. And many have invented stuff because they had “nothing else to do.”

If you don’t want to indulge into any of these things to kill your own boredom when you have nothing to do in the stock market, here is a better 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 boredom get to your head, and lead you to act in haste just because you want to bring back excitement into your life.

Warren Buffett wrote this in his 1990 letter to shareholders…

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

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

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About the Author

Vishal Khandelwal is the founder of Safal Niveshak. He works with small investors to help them become smart and independent in their stock market investing decisions. He is a SEBI registered Research Analyst. Connect with Vishal on Twitter.

Comments

  1. Great article

  2. Rakesh Nambiar says:

    Great Article Vishal…Thanks. I beleive, when Pascal said ‘All man’s miseries derive from not being able to sit in a quiet room alone’ , he was reffering to value investors who suffer from boredom!…Like Mohnish Pabrai says, to be a good value investor one should be a ‘gentleman of Leisure’ and ‘should be able to sit and watch paint dry’!…

  3. Anil Palan says:

    Vishal ji,

    Really a Very mind blowing article. Enjoyed reading the article which will help me in future decision making to a great extent.

  4. Makes sense & can correlate to some of my stupid actions…

  5. Harjot SIngh says:

    Nice article Vishal. I read this famous quote few months back stating “The chief product of an automated society is a widespread and deepening sense of boredom.” But I must say there can be excuses to be sad, angry or depressed but there is no excuse to be bored.

  6. Nupur Jain says:

    Great insight into boredom and investing! Thanks Vishal 😃

  7. Long term investing is like watching the Grass grow.
    Once you got the right stock then just sit tight is the mantra to win in stock market.

  8. Kulbir Lamba says:

    Thanks Vishal for this Article and I think no reader of this post will disagree with your statement “Talking of removing boredom through pursuit of excitement, look no further than the widespread consumerism that has engulfed the modern society”.

    The consumerism is being bombarded on us in such a way that they are not sparing an iota of space in our mind to think/ feel of these emotions (boredom, happiness, love) and after every dose of excitement we want next of higher intensity.
    I think it will be good to feel/ observe these situation with emotional agility and one recent post on ZEN HABITS (Why I’m Always in a Hurry, & What I’m Doing About It) can give us more ammunition to sustain through such conditions..

    Warm Regards

    Kulbir Lamba

  9. Jay Joshi says:

    Excellent read! I will be honest; I started reading it twice but gave up after multiple definitions of “Boredom” discussed in the article. However, for the third time; I persisted and then I saw the ingenious trick used by you (perhaps unknowingly). The way I see it; the article starts slow (bordering on “boredom”) and then gradually builds up to the ultimate point you wanted to make (which is fall in love with boredom in one’s investments:D) I have been a frequent reader of your posts and must say; I learn a lot from each one of them. Genuine gratitude!

  10. Rajeev Vaidya says:

    Vishal, I am an avid reader of your posts. However, I notice you are very general in your thoughts.

    What you say has already been said and analysed ad nauseous.

    Like why not be specific about applying the same to Indian stocks. Am not saying you to recommend specific stocks but give more examples. There is only one Warren Buffet, one Peter Lynch, etc and we small timers can never be them.

    It is only in hindsight that you feel that a particular stock was a multibagger.

    I think Lady Luck is the only reason where you get multibaggers.

    Am confused.

  11. R K Chandrashekar says:

    Hi Vishal
    Your article was certainly not boring; on the contrary, it tickled the grey cells to say something meaningful. I overcame boredom in long term investing, by behaving vicariously!! I look.at my portfolio every day dispassionately, read business magazines and occasionally watch CNBC, but do not act/react to what the pretty faces and the experts are saying.. I have my own mind and free will. This way, I kill my boredom of investing. Again, there is more to life than wealth creation.
    So be it.

  12. Hi Vishal!

    I have been reading Peter Lynch’s book ‘One up on Wall Street’. He also says quite a few ‘boring’ things:-

    1. First he says he would like to buy a stock that has a “Boring Name”.
    2. Second he says it would be better if it also does something boring.
    3. Third he says it would be even better if it’s headquaters are located at a Boring place and no analyst follows it.

    I think being boring in the stock market really helps because there wasn’t anything boring about the stock prices of companies with above characteristics.

  13. Niyas CV says:

    Sir, you rock.. Superb article

  14. Varun Tyagi says:

    Absolutely Gem and original.

  15. Great post.
    Reminds me of this quote from Reminiscences of a Stock Operator:

    “It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I’ve known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine–that is, they made no real money out of it. Men who can both be right and sit tight are uncommon.”
    ― Edwin Lefèvre

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