February 2, 2009

Time management

I received this email from vikas and thought of putting a post on it.

I had a very quick qn for you. How do you manage to find time for your daytime profession, your family and your value investing hobby? Please give me some examples from your daily life. I find myself in a very similar position and I find myself unable to spend anytime learning value investing?

This is an important question, especially for non professional investors like us. Most of us, having a day job, do not have the luxury of being able to spend 8-10 hrs a day reading, analyzing and visiting companies for our investments. So how do I go about it? It is neither a prescription nor some approach, just an idea of what I do.

Lets invert the problem. With limited time, what can I ‘not’ do?

- Cannot track stock prices, volumes etc on an hour by hour basis
- Cannot trade short term, as I may not be able to execute the trade at the right time due to other commitments.
- Cannot analyze more than 30-40 companies in detail or more than 1 or 2 companies per week.
- Cannot track market gossip, chatter, inside news etc.
- Cannot devote more than 10-15 hrs (max of 20 hrs) to investing

With the above constraints in my, I have adopted an investment style, which matches my situation. As regular readers of this blog would have realized, I typically analyze and invest in a limited number of companies. I run a few screens to generate a list of decent ideas, analyze those ideas in detail and invest in a few for the long term.

In addition, I spend 2-3 weeks analyzing a company in detail and build my position over the next few months.

A professional investor would typically be able to devote 50-60 hrs per week on investing. However due to a day job, family and other time constraints, I am able to devote a maximum of 15-20 hrs per week (on average).

I spilt this time between learning value investing, reading up on companies and on this blog. Almost 50-60% of my time is spent on reading up on companies and following my current holdings, 20-30% on learning value investing and the rest on this blog (10-15%).

The other reason for being able to devote 10+ hrs per week on investing is due to the fact that I have no other hobbies or interest (other than watching movies). So I am a pretty dry person with limited interests outside investing :)

I am not able to devote 10-20hrs per week every week. There are weeks when, due to job and other constraints, I am able to devote only a few hours a week. During other times, when work is slow, I am able to put more time into investing. In addition, I use my spare time, travel time etc to read books and annual reports.

I have been doing this for the last 10+ years and although the time spent per week or month is small, the learning accumulates over time. The initial few years were spent in learning the basics and there were several times when I felt, I was not making much progress. However over time slow and steady progress adds up.

I eventually plan to invest professionally. The main reason for that is that I am passionate about it and would like to spend more of my working time on it.

The best person to answer the question would of course be my wife and kids who typically see me with a book or on my laptop reading something or engrossed in my thoughts thinking about some investment idea :). Of course my wife does not read this blog …so I am safe!

I think the key to finding time is how passionate or interested you are about investing. Paradoxically if you love the process of learning and investing and are not into it just for the money, you will find time and will enjoy the journey more than the destination (returns in this case).

Added note: I have switched the feed to this blog. There is a re-direct of the old feed to the new one in place. I would appreciate if some one can leave a comment if they are reading this post via their feed.

Next post: How do I plan for investing (if I feel there is interest in the topic)

14 comments:

Vijay said...

I am reading this blog via a feed (google reader)

rmathew said...

FWIW, I'm reading this post via the old feed (so the redirect seems to be working fine).

Just FYI, I'm using Thunderbird 2.0.0.19 on Fedora 8 (Linux).

sudhir said...

Yeah im reading this post through feed reader.

striker said...

Hello Rohit,

Been reading your blog for some time and gotta say...its been wonderful reading.

I am reading this blog via a feed and it works perfect for me (using google reader).

Also...i m keenly interested in the next post on how do i plan for investing and would like you to do a post on it if possible.

Waiting your next post eagerly...

Rohit Chauhan said...

hi all
thanks for letting me know that the feeds are working

regards
rohit

Anonymous said...

A nice post again Rohit. Thanks a lot. In fact it is always better to learn from recent live examples from a person closer to you. In this case the learner feel closer to the person from whom he is learning and the motivation to learn things becomes more. Of course we can read Buffet also, but when I read your post I felt more motivated.

In fact it is really very difficult to learn investing along with your day to day job, particularly for a person who never know how a B/S or P/L looks like.We spend as much as 10-13/14 Hrs a day in office. After that it's really very difficult even to read a few pages from a book. Because again you have some social responsibilities towards family and relatives etc. So what it needs most for people like me to learn investing is to have a very good will power and always have eough enthusiasm to maintain the spirit. Because this investment learning process can only be done over a time. So spontaneous interest and constant enthu to learn things is very much important.

Anyway I am into investment since last 2/3 years and am trying to learn things gradually as far as possible from people like you ! Let's hope over a time I will also be able to learn at least the basic of investment.

Regards
Gcpradhan1

Anonymous said...

Hi Rohit,

In the previous post you mentioned that when you finish analysis of a stock, you decide about the position initially and then build it over next few weeks. Do you decide position for that stock as a percentage of the portfolio or absolute value.

If it is not a percentage value, then if any extra money you want to add , you will have to put in a new stock resulting in dilution of portfolio.

I wanted to compare it with my case to identify shortcomings in my approach. I take out some part of my salary every month and put it in identified stocks. So I keep on added to existing positions. But i try to maintain the percentage investment in particular stock to avoid overexposure.

Amit

Investors times said...

I am also married and a is a teacher who needs to prepare the next day classes. So it helps to know how fellow investors bloggers are doing. Thanks a lot

Anonymous said...

Hi Rohit
Please read the following article in ET. explains about Capital Gain/loss & taxation.

http://economictimes.indiatimes.com/Personal_Finance/Tax_Savers/Tax_News/Leverage_your_equity_losses_to_save_taxes/articleshow/4075367.cms

Regards
Ani

Rohit Chauhan said...

Hi GCpradhan
you have highlighted the time constraints all of us face as non professional investors. investors like buffett are not helpful in this case, as they are into it full time.
i think it would only take longer for us to be better investors as we have less time. but in the end if we keep working at it, we will get there
regards
rohit

Rohit Chauhan said...

hi amit
my equity portfolio is a fixed % of my total portfolio. i have increased the absolute number as i have saved more money. in addition, i have increased the % as the market has dropped and will do the reverse when the market rises.
once i have arrived at a number for my equity portfolio, i divide it equally among 12-14 companies. thats how i decide on the position size for each company. hope this helps
regards
rohit

Rohit Chauhan said...

investor times - glad to be of help

ani - will look at the article

regards
rohit

Anonymous said...

Actually, I can build a spreadsheet in vba that tracks anything you want. stock prices per hour, brings in financials, let me know if any of this interests you.

Rohit Chauhan said...

hi anonymous
yes, it would be a good tool to have. you can share it with everyone on the google groups if you want

regards
rohit