All of that talk. All of that ink. For meaningless movements.
The post Daily share price movements: Full of sound and fury… appeared first on The Motley Fool Australia. –
I read a tweet, from stockbroker CommSec, just before the market opened this morning.
Here’s the text, in full:
“SPI futures are down 36pts or 0.48% ahead of the market open. The #ASX 200 is up 54pts or 0.72% so far this week”
And, while I’m used to that sort reporting, for some reason the tweet just stopped me in my tracks.
“Really?” I thought. “That’s it?”
Now, to be abundantly clear, I’m not having a dig at CommSec.
Yes, I think (most, not all) brokers have some responsibility for trying to entice us to overtrade. But that’s also their business model, so we can’t be surprised.
Commonwealth Bank of Australia (ASX: CBA) shareholders wouldn’t exactly be thrilled if CommSec tweeted:
“Yawn. Not much happening on the ASX. As usual. Nothing to see here. Go back to work.”
And yet, that’s a far, far more useful (and accurate) statement.
As I tweeted in response:
CommSec is (rightly) just sharing market data, so this isn’t directed at them.
But seriously, read that tweet and tell me why you’re paying attention to daily and/or weekly moves?
Fractions. Of. One. Percent.
Then go do something else!
But let me flesh that out, just a little.
In four trading days, the ASX is up an average of 0.18% per day (I know I should adjust for it being a compound, rather than a simple, return, but the number would be even less, so I’m being generous).
Zero. Point. One. Eight. Percent.
And if today’s futures were accurate (spoiler alert: they often aren’t), then after 5 days, the average daily gain would be 0.048%.
For a whole week’s trading.
All of the buys and sells.
The breathless market reporting.
The millions of times Australians have refreshed their brokerage account to see what’s changed.
(Turns out that the market opened while I was writing this, and at the time of writing, today’s losses are 1.07%. As it turns out, the week’s result is currently negative, but the size of the move is roughly the same.)
I mean, I guess if you’re trying to day trade, you might care (and you have my sympathies).
If you’re a long term investor (you should be!)?
At best, it’s irrelevant.
At worst, it’s just noise that ends up actually being a net negative because it entices you to trade when you should have just left well enough alone.
Again, remember: 0.18%.
A complete waste of time.
Me? I’m glad you asked.
I try to find good businesses. I buy shares if the prices are attractive.
I just let them do their thing.
The market has nothing to tell me.
If the companies make an announcement, I’ll read it.
If the share price moves meaningfully, I’ll make sure I haven’t missed anything, and see if I’m getting an opportunity to sell for a motza or buy for a steal.
I just let the businesses keep doing their thing.
Turns out, Woolworths Group Ltd (ASX: WOW) doesn’t care how frequently its shareholders check the share price.
Turns out, BHP Group Ltd (ASX: BHP) doesn’t make more money if you hit refresh on the share price page more often.
Turns out, the good people at CSL Limited (ASX: CSL) don’t down tools when the share price loses 1%.
I know. Who knew…
Maybe, we should take their lead?
The post Daily share price movements: Full of sound and fury… appeared first on The Motley Fool Australia.
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