Temptation and Emotion

Wow, what a few weeks for an investor! I am tempted to say, what a disastrous few weeks, but that would be unfair to all the smart investing advice I have been given through books and other reading material. Then again, I cannot even say what exiting few weeks, since all these corrections and buying opportunities cannot give any normal investor any confidence about what to do right away.

So I will just write about what my own thoughts are regarding all this. To begin with, I am pretty sure if I had money to invest right now, I would have bought something missing from my highly unbalanced portfolio. However, as is the habit, even though I have nothing to gain/lose from that action, every morning I check how the market is doing and how my portfolio is holding up. Now, I have no intention of doing anything in a time like this that involves selling or panicking, I am after all a mere mortal. And sadness and disappointment does lead to a very strong temptation to "do something".

The idea of course is to resist the temptation to do anything. I know that, and so does probably anybody who has had made an effort to learn all the basis of common sense investing. I can give out all sorts of charts showing you how not selling, sticking to the long-term investing strategy in a market like this works out way more beneficial for an individual investor as compared with somebody who does such "crazy" things, but then I would not be able to call myself a "lazy investor". So, just believe me or pick up any decent investing book.

I guess what I am saying is that even after knowing what the right things to do are, investing, money, personal finance, the stock market, etc have a very strong human element to it. We are all emotional human beings and panic, disappointment, excitement and most importantly temptation are factors that no book or knowledge or advice can teach you. That unfortunately has to be handled individually.

As for me, I generally deal with days like these by a few minutes of silent cursing followed by some sulking, a brief moment of panic and then moving on with life......

A tool I could use

I haven't had the need yet to rely on tricks and tools that are now freely and readily available online for a regular investor these days.

I use all the information I can from Yahoo! Finance, once a while I will use Morning Star's Instant Portfolio XRay and maybe sometimes ETF Connect's Fund Sorter. These seem to have done the job for the information I was looking for, though in no sense do I consider myself a "power user" for any of those.

However, very recently I have felt the need to have a tool that could give me a list of ETFs, from a list of stocks that I provide as input. What I want to do is to see, if say for example from a list of 10 companies I like, in a sector that I like (or need for a balanced portfolio), which ETF(s) do a maximum number of those stocks belong to.

Sounds simple enough, and I refuse to believe there isn't anything like this out there. Maybe I haven't been looking for it hard enough. Or maybe such information is not needed by the mere fact that following a balanced investing scheme using ETFs, you would never have the need for looking up that sort of information.

It would be at least a fun thing to play with...

C quiz question

I was looking at coming up with a few small C/programming questions for a number of interviews that I am taking these days. Here is one that is interesting:

What would be the output in the following piece of code?

main()
{
  int  a[5] = {1,2,3,4,5};
  int *ptr =  (int*)(&a+1); 

  printf("%d %d" , *(a+1), *(ptr-1) );
}

I needed to compile and confirm, but the output in this case would be "2 5".
How we get "2", is obvious. The interesting one is how we get the "5".
The reason being ptr is a pointer to the array of integer. Not a pointer to an integer.
So when you do &a+1, you are pointing to the next array of integer, and not a[1].
Hence, when you do *(ptr - 1), you end up dereferencing a[4].

It gets interesting when I next ask you for output of the following piece of code:

main()
{
char a[5] = {'a','b','c','d','e'};
int *ptr = (int*)(&a+1);

printf("%c %c\n" , *(a+1), *(ptr-1) );
}

Seinfeld, and the logic of investing

Like anybody with a TV and some sense of humor, I watch a fair share of Seinfeld reruns whenever I am too lazy to do anything else. In one episode, there was this funny bit on the show towards the tail end when he does the stand-up part; he was talking about the whole "let your money work for you" part of the basis of successful investing and wealth management.

He said something like, "I don't get the whole let your money work for you bit. I like to do the work and let my money relax. Because ever so often, it happens that my money that I send out to do the work, decides to disappear. You go and check what happened and they say...yeah, your money, was no good....showed up late for work, took long lunch breaks, etc....so we had to let him go". :-)) Really funny stuff.....

Anyways, the reason I sort of decided to write that Seinfeld bit down was mainly to not forget such a cool joke and partly because very recently I was thinking about all the things you learn about financial planning, wealth management and investing and if the knowledge of those things really does get you ahead in the game? Whenever I stumble upon an article or blog post or a book talking about good practices and steps that one should take, I realize that I am already doing 90% of the things mentioned, but there is no instant grading of what really worked? There is very little instant gratification unless you make an even bigger effort of analyzing things to the death and looking into the future.

Wouldn't it be nice to have something like a score that you could look at and see if some steps, like making two payments a month (if your mortgage company allows) on your home mortgage instead of just the one monthly, is really doing an excellent to your financial future and in turn encouraging you to do more. Maybe that is a really nice opportunity to come up with such a system. Say for example like the credit score (not necessarily the best example, but lets go with it for now), where you have a "financial health score". It is determined by a complicated formula that takes into account your age, income, active investments, retirement portfolios, cost of living, lifestyle and a ton of other things and gives you a number to look at, to analyze and work with. That would be instant gratification. That would make me want to really do things to get my score higher. It appeals to the natural competitive nature of all human beings.

Oh well, its a good thought......and its never bad to dream.