Now that it’s the middle of August, a lot of late-summer vacationers are headed out the door (including myself – California, here I come!). The point of a vacation is to get away from the stress-filled “normal” days of our lives, which means that we’re not going to do what we normally do. So I’ve been wondering, “what should I do about my investments?”, which led me to writing this post.
The actions that you should take depend on what kind of an investor you are. If you’re a long term investor, stay put, but if you actively invest in the markets, you’ll either need to scrap the vacation or scrap the investment.
Buy and Holders
The simple answer is: nothing! Buy and holders generally don’t care what the will happen in the markets for 2 weeks, so why worry about the markets when they’re on vacation? If you’re a buy and holder, just carry on with what you’re doing – keep what positions you have and don’t buy or sell new positions.
More Active Investors
For more active investors such as myself, a vacation often turns into a “work” day (e.g. the market makes a major move, time to pull out my laptop forget about the next stop on the roadtrip). Here’s how I deal with my investments while I’m on vacation.
- I generally try to close all my positions and go 100% cash so that I can actually enjoy my much needed rest. In addition, an active investor needs to be dedicated to the market if he is to invest properly – which I definitely can’t do on the road. If the market moves against me and I didn’t close my position, I won’t be able to properly assess the situation.
- I’ll try to predict what will happen in the markets for the duration of my vacation. That way, I’ll know if A) Nothing significant in the markets will happen, which means that I can enjoy my vacation OR B) The markets are about to lurch, which means that I’m in deep trouble.
- If choice B) comes along, then I’m really in deep trouble. Since I only make a few investments each year, I’ll be missing out on a big piece of price action! Less profits! Oh, the horror! In the past, I’ve done different things to confront this situation. #1 Cut the vacation. While I’ll miss a much needed rest, at least I’ll make more money! #2 Forget about the market – just carry on with the vacation.
- Looking backwards, I think that #2 is the best thing to do. Although I may miss out on temporary profits, the recharge to my psyche and mental batteries that comes from a vacation will benefit me in the long term. For example (this is a little off topic), I had a friend who was laid-off. He searched 4 months for a new job, but to no vail. After coming back from a vacation to the Carribeans, he found a job within 2 weeks – the change in his spirit and psyche must have been noticeable to the interviewers. By recharging my batteries I’ll be more likely to grasp future profitable opportunities
- Buy-and-holders: hold onto what you have!
- Active investors: In the long term, it’s more beneficial to get a much needed rest than to make a little more profit.
I’m just curious – what would you do about your investments while you’re on vacation?