Working Too Hard Is Hurting Your Portfolio

Editor's note: The markets and our offices are closed on Monday, September 5, for Labor Day. Because of this, we won't publish Altimetry Daily Authority. Please look for your next edition on Tuesday, September 6.

No one can be 'on' constantly...

As much as we'd like to think of ourselves as tireless machines, we simply can't operate at 100% effectiveness, 100% of the time.

Yesterday, my colleague Rob Spivey explained how America's workaholic culture is taking over our lives. It has gotten so bad that some companies are even mandating consecutive days off for their employees.

The takeaway is this... We all need breaks to stay productive. Even corporate America is catching on.

Think about the last time you tried to be a "hard charger," pushing yourself past your limits. You probably found yourself getting distracted against your will – whether mentally or physically.

In order to be efficient and focused, you have to give your mind a break. And this doesn't just apply to everyday life, either. It's also a critical investing skill.

Before putting money to work, it's important to fully consider the possible risks and rewards. But you can't do that if you're too worn out to think straight.

Psychiatry professor William Killgore has conducted several studies on the relationship between sleep deprivation and behavioral risk-taking.

The results are clear – when we're sleep-deprived, our decision-making suffers. Often, we take unnecessary risks. Lack of sleep hurts our attention spans and even changes our emotional responses to frustrating situations.

In other words, you're more likely to make uninformed... fast... and even aggressive decisions when you're tired.

If you're not used to pacing yourself, it can take some practice (and patience).

Fortunately, there are a few easy steps that can help you get started...

Of course, getting proper sleep remains at the top of the list. The average adult needs about eight hours per night.

Make sure that sleep is good quality, too. Cut out caffeine at least six hours before bed. And turn off all electronics an hour beforehand.

During the day, remember the "20-20-20 rule" for screen time. Every 20 minutes, stand up, find an object at least 20 feet away, and look at it for at least 20 seconds.

These mini-breaks help readjust your eyes and legs. They also remind you to reset your posture. That way, you'll be more focused when you're back to the task.

Another good rule is something called the Pomodoro Technique...

The story goes that when the technique's creator, Francesco Cirillo, was a university student, he invented a time-management technique. It involved working in 25-minute bursts, followed by five-minute breaks. He'd complete three circuits, then take a longer 30-minute break.

The name "pomodoro" came from the tomato-shaped kitchen timer he used while in university.

There's some real science behind the Pomodoro Technique... and it takes us back to Germany in 1927.

Bluma Zeigarnik, a psychology student at the University of Berlin, was trying to understand an interesting phenomenon regarding restaurant waitstaff. She and Professor Kurt Lewin noticed that these folks had an amazing ability to recall orders table by table, so long as the customers hadn't received their food yet.

While the orders still had to be filled, they continued to remember. But once an order was completed, the waitstaff's memory of any particular table dropped dramatically.

This is because our minds are good at connecting the dots, even if a task isn't our primary focus. When we consciously acknowledge that a task is incomplete (by taking breaks), our minds continue to work subconsciously. This became known as the "Zeigarnik effect."

So stepping away and taking breaks isn't a waste of time. It actually allows us to make better decisions.

As I already mentioned, breaks should be a part of any sound investment process...

It's easy to become enamored of an investment idea – and ignore any evidence to the contrary. If you don't take breaks, you might start making riskier decisions without even realizing it.

No matter how much due diligence you've done, you should still "Zeigarnik it," as we say around the Altimetry offices.

Get up, walk around, and readjust your eyes. Allow your mind to wander – perhaps make some dinner with your pomodoro timer, or get some sleep if it's late.

By doing so, you give yourself time to change your mind... or gain even more confidence in your decision.

Wishing you love, joy, and peace,

Joel
September 2, 2022