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Long Term Investing in An Age of Small Attention Spans

My 5-year-old son Chaitanya, like most kids his age, paid little attention as I showed him how to make a paper boat for what seemed like the hundredth time. I said, “Fold the paper into half, then fold here, and then here.”

As I was talking, he kept looking at everything except at what I was doing. He fidgeted and played with his pencil. I kept pulling his attention back to what we were doing and my constant refrain was, “Pay attention!”

Ultimately, I lost my patience, and moved on to reading a book on my Kindle.

It’s not that Chaitanya is uninterested all the time. He is completely focused when I read his favorite books, or when he is playing with his Lego blocks. But at other times, asking him to focus is an exercise in frustration.

Now if you think kids with their terribly short attention spans are tough to deal with, consider this. In 2000, the average human attention span was 12 seconds i.e., we could focus on any one particular thing just for 12 second before being distracted or allowing our minds to wander. If you think that was terribly low, please note that this number has now fallen to just eight.

When I look back to that time when I lost my patience on Chaitanya and moved onto reading a book on my Kindle, I realize that I was onto a second book in the next five minutes, and to a third book in no time.

As per scientists, the goldfish does better than humans on this account – it is able to hold its attentions for, hold your breath, nine seconds.


Now, if you think that attention spans don’t really matter – after all who is bothered about what happens in a few seconds – note that the implications of having such a short attention span are immense.

Look at the stock market. As per the NYSE Factbook, the average holding period for stocks in 1960 was 100 months (8 years). By 1970 it had dropped to 63 months (5 years). By 1980 it had dropped to 33 months, by 1990 to 26 months, by 2000 to just 14 months, and in 2010 just six months.

Even in India, when I look around to see what most people in the stock market are doing, I see them considering two-three months of holding stocks as painfully long.

I met a gentleman in my Mumbai workshop who recently held on to his “high conviction” idea for five months, before losing patience as the stock cracked post demonetization.

Then I met a high net worth someone in Chennai, who has been “playing” the stock market for the past fifteen years, but has never held a stock more than six months. “I take concentrated bets,” he told me, “and then book my profits or losses in under six months. Beyond that is, like, painful.”

How much ever I wish more people would invest sensibly and for the long run, and whatever I want to drill into their minds through my posts, courses, and workshops, I deeply believe it’s a permanent change.

I can see no influence that would revive most people’s interest in holding stocks and mutual funds through times of trouble. Sure, the number of people who believe they would practice long term investing even through bad times has increased over the years. But most of such people just need one extended bad market to shake their belief.

If you think a long period of good market performance would lead more people to invest for an extended time, you are mistaken. We have had long bull markets a few times in the last few decades, but the decline in holding periods has been steady.

And this – reduced attention span and thus reduced stock holding periods – has led to a lot of people lose a lot of time (that they could have used to focus on lesser but deeper learning) and money (opportunities they may have lost out on by selling their high quality stocks sooner).

So What’s the Solution?
Frankly, I don’t know a solution to help people improve their attention spans or increase their stock holding period. I mean, it seems asking a goldfish to stay with something longer is an easier task in today’s times than asking a fellow human to do so.

But still, here are a few things that I have implemented in my own life that have helped me improve my attention span at most times, and keep my stock holding period high –

  • Looking at businesses from a 7-10 years’ perspective before and after investing in them, instead of how I may benefit from information asymmetry in the short term and how much money the stock may earn in the next 1-2 years. Read this post on how thinking and acting long term is your “only” edge as an investor.
  • Not maintaining my stock portfolio online – I use Excel, where I must punch in the stock prices every time I need to update my portfolio. And because punching stock prices is hard work, I don’t do it often.
  • Not reading newspapers – I find them a great distraction ( I would rather set up Google Alerts to receive the type of news I want)
  • Not having social media apps on my mobile handset – It becomes an issue at times when I wish to post something on Twitter etc., but the pros outweigh the cons.
  • Not participating in any Whatsapp stock discussion groups – Vicarious experience tells me these are super noisy places, and induce a lot of greed and envy.
  • Switching off all notification reminders etc. from my smartphone (which often induces me to dumbness with every beep it makes)
  • Not checking my mobile first thing in the morning – helps my brain avoid exerting a lot of energy first thing in the morning. Instead, I start my day reading a book for around 30 minutes.
  • Waking up early (between 5 and 5.30 AM) when the noise and distraction is at its lowest. Helps in building a greater focus.
  • Meditation – Just the act of sitting and “doing nothing” for 30 minutes every day has helped me tremendously.
  • Implementing one trick I learned recently from reading Roger von Oech’s book A Whack on the Side of the Head is to take an object about the size of an apple and then play with it, like flipping it back and forth from hand to hand. It helps me relax my mind. I often use tennis ball for this activity. You may use a Rubik’s cube. Try it. It may help stimulate a different part of your brain, and may get your creative juices flowing.
  • Working some time standing instead of sitting. I realize that you are more focused when you are standing than when you are comfortable in your cushy chair. I don’t know how it works, but it has worked for me.

Despite doing all this, I am sure a goldfish would beat me on a few days. But the results I have received from practicing most of what I have mentioned above on most days have been amazing. Both in improving my attention span at most times, and also in my practice of being a long-term thinker and investor.

Over to you!

P.S. If you have read through this entire post, congratulations! You beat the goldfish this one time. 😉

P.P.S. I would love to hear from you what you have done (or are doing) to improve your attention span. Please share in the Comments section of this post.

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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. Reply to P.P.S. 😀 just believing that I will stick to my assets even through rough times, as of now. Will follow it up with action. Its a wonder how much clutter (in this case speculation) gets deleted from the mind when you hold onto a simple belief.

  2. Harinder Singh says:

    Treat stock’s as a real estate investment. Even in the worse of times it will grow in value through the years.

  3. ADVAIT JOSHI says:

    Switch: How to change things when change is hard – Chip and Dan Heath, would prove an extremely useful book in this particular context. Kind regards, Advait

  4. kalpesh karia says:

    Brilliant !

  5. Udisha Trivedi says:

    It was a very interesting topic so I could read through the entire article. To improve concentration the mind is required to be properly trained. I do mantra meditation for over 90 minutes in which sometimes I’m successful in concentrating for few mins. Also planning your day in advance saves time which is otherwise spent doing time pass on social Media. Making a things to do list in the morning and then using time in a planned way. Exercise also helps in improving once concentration and is good for young and healthy body.

  6. kalpesh karia says:

    Brilliant

  7. Fortunately I am able to beat the goldfish but unfortunately I’ve been beaten by my own past self. I don’t know what caused my attention span in school and college to be that long and I don’t know what caused it reduce now- maybe it happens with age? Especially since comparatively there is less noise now than earlier days (i.e. now no cable TV, no newspapers or magazines, cell phone switched off most of the time, more meditation etc).

    Good news is that I can still beat that goldfish !! 😀 😀

  8. My oldest stock is 10.5 years old (yes, years) and my mom holds some shares since like 35 years (before I was born). I have friends whose dads have held stocks for 25years+.

    I don’t think it’s that hard. Some people don’t have the temperament but most people I see around me have no issues holding for at least 1-3yrs.

    If you can’t hold on to a stock for a few years maybe try something else, stock investing is probably not for you but there’s a million different ways to make money

  9. Bharat Wadhwa says:

    Since the time, I deleted FB, Instagram from my mobile phone due to some other reason, I have observed that it has resulted in a decrease in the number of times I picked my mobile phone for no particular reason.

  10. The second point – Not maintaining my stock portfolio online – I use Excel, where I must punch in the stock prices every time I need to update my portfolio. And because punching stock prices is hard work, I don’t do it often. I thought I was the only one doing this!!!. Even though I do not have a stock portfolio but a Mutual fund portfolio, I have seen that the mere thought of updating the xls has kept me away from visiting the NAVs daily ..even quarterly sometimes. Have been holding some MFs for close to 7 years now..

  11. Stock movement on deterioration side is very rapid in Indian context. If a stock has moved 30% up in 2 years which is decent, it just gets beaten down to 50% in a week time. The reason could be market crashing, poor quarterly result, FDA negative observations, quitting of the senior mgmt, election results, oil prices, RBI interest rates, monthly auto sales reports, Commercial paper defaults and so on. I don’t find fault with less holding time and as more information pours in a flash of seconds, we might see further shortened holding times.

  12. Radhika Podar says:

    Amazing article. thank you for sharing.
    I did beat the goldfish this time!! and would like to continue to beat. Thanks for raising and discussing thus topic. I also believe it s very common problem now a days, attention as well as holding stock for longer time. I shall try to implement the ways you just suggested for improving my attention span.

  13. Mahesh Lotake says:

    In my experience Meditation is the only effective way of increasing attention span. You don’t have to practice the other things mentioned in the article, they will happen automatically with less efforts/friction. More time you spend on meditation less time you have to spend on managing/practicing other things. I do Vipassana 2hrs/daily and all other things like attention span, concentration, anger, greed, decision making, lifestyle fall into place automatically.

  14. Pursuing an art or craft that you love by actually going to a teacher. Watching the teacher explain a point 2-5-10 times has taught me a lot on persuasion from the teacher and concentration/effort from the student.

  15. Suresh Nadagouda says:

    Very true sir. Doing nothing at least 30 mins in the early morning not only helps to stay calm but also it helped me to focus on my work through out the day.

  16. To help my investing I reread your posts and articles…. This helps to keep my mind grounded on the goal….. thank you……

  17. R K Chandrashekar says:

    Dear Vishal.
    Your piece, reminds me of Cricket. I used to watch, 5 days of a test match in my school days; today’s generation attention span is so low, that they have invented 20/ 50 over tamasha! When it comes to investment, I never act on the noise I see on TV. I watch for vicarious fun 😁. I never react to good or bad news on my investment. My wife, jumps to action, if there is commotion in the neighbourhood, I sit like a monk. I hate to say this: but I have created wealth the old fashioned way. Buying great companies and holding them for ages/ever. Longest holding- Hindustan Lever- 37 years, HDFC bank ( bought around the IPO time in 1997 or so for 70 Rs, Asian Paints, Pidilite, ITC , Nestle, Infosys, Hero Honda and L & T all 15 + years of ownership and friendship!! I have been trifle lucky buying early and staying put in Eicher Motors and Bosch in spite of rich valuations.
    To put in a nutshell, I bought great companies, and simply sat on them; low churn, less number of decisions and giving enough time for compounding and luck to play it’s part😁

  18. Hi Vishal!

    Damn right you are when you say attention spans have decreased rapidly supported by some beefy evidence; so also with stock holding periods. But when stock holding periods have declined to Monthly Averages, wouldn’t this be pure speculation instead of investment? Going by the basic definition of investment that is. I used to be this kind of an investor 10 years ago when the average holding periods were higher. Now, I’m more sane when it comes to it. Most of my portfolio is heading to over 2 years now. And by doing so, I’ll be saving some LTCG also (-; Keep the tribe hunting! Cheers!

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