Too often – whether it’s about money, time, work, and everything else – action is viewed as uncompromisingly good. If you’re not doing something, you’re wasting time – and, as we know, time is money. So usually, we want to do something, anything, now (or at worst, very soon).
But sometimes, sitting still is better. As Jim Rogers says, there are times – like when you’re coming off of a big market victory and are flush with confidence – when doing nothing in the market is the better option. Just because you have cash doesn’t mean you should use it. After all, there’s no better hedge than cash.
But to many investors, cash is the financial equivalent of the eighth deadly sin of the 21st century: Procrastination.
The price of procrastination is less than you might think
Procrastination is delaying or postponing something – or putting off until tomorrow, what you could do today. Sometimes people procrastinate because they just can’t get started.
Or they suffer paralysis by analysis. There’s no end to the number of people you can talk to in order to get advice. The internet is the great procrastination promulgator… there’s always another link to follow, down a URL rabbit hole.
In some ways, decisions were easier when there was less information so readily available. Deciding on a breakfast cereal when you’re in a dining room-sized 7-11 or Cheers shop is much easier than when you’re staring down three dozen options in a mega-supermarket’s breakfast aisle.
When it comes to your money, the cost of procrastination is often framed in terms of regret. Every investor has a story that’s the financial equivalent of the fisherman’s “one that got away”: The stock that doubled overnight just before you were going to buy it… the real estate deal that would have made you a millionaire many times over if only… the Porsche-and-penthouse pal who got there through a deal that he offered to let you in on – but you didn’t do it.
What the fisherman doesn’t talk about is all those times that he tossed his line into the water and came up with… nothing. No one wants to hear about baking in the hot sun for hours without a nibble.
Similarly, you won’t hear many investors talk about the amazing stock that they just had to buy that went… nowhere. Or, worse, it drifted down, and slipped through its stop-loss like sand through a sieve.
Defeat is a dull story unless it involves a spectacular downfall, like one that brings down a bank or ends up costing over US$7 billion. Defeat is usually an expensive lesson… I learned a lot when I lost $50 million of other peoples’ money.
What this means is that the cost of procrastination – at least when it comes to money – is probably a lot less than you might think it is. Very rarely is there one that gets away. More often, there was nothing there in the first place.
So when it comes to your money, it’s nearly always fine to wait a bit. Yes, being slow might cost you. But if you don’t procrastinate just a bit, it will probably cost you even more.
Publisher, Stansberry Pacific Research