The third layer is Gluttony, served on a platter of price movements, opinions of the Limbo kind, information abundancy and consequent overload at a click of a mouse, further clouded by checkitis, the living souls here are driven to a state of poor cognition with over-confidence or panic surfacing. The result… Overtrading.
The act of constantly opening or closing investments is dangerous as we use ever shorter time-frames to make meaning of price movements, the rationalization for entering and closing an investment become ever more due to external factors (price and other opinions) rather than the internal factors – our own decisions and valuations.
This arises due to the average speculator believing in his ability to time the market, the ability to correctly sell at the highest price and buying at the lowest price. But as we know this is Gullible behaviour! Too much action, too little deliberation!
Unfortunately, overtrading has serious side-effects, as the lure of capturing all the upside and avoiding all the downside gives rise to another disease: Switchitis.
Switchitis is a by-product of overstimulation due to checkitis, common in over-traders speculators and gamblers, who make up an investment decision today and change them the next day pending on what that price quotation says, or what the Limbo people tell them, or even to their own insecurity.
But take a deep breath, and forego all this nonsense. In our investment life we will need no more than 10 great ideas to have a track-record that is in the top percentile. That equates to less than 1 decision per every 2 years. Time is your friend.
Don’t let that checkitis turn into swichitis, reminds our Kid Plunger.