Overview – Time Management in Investing as a Balancing Act
There are times when we are faced with a relatively simple yet important dilemma: when completing a given task, should we do it as quickly as possible, or to the highest level of quality possible?
Sometimes, this choice is a relatively easy one to make, but other times we must stop and seriously consider what the best way to proceed is. Opting to go in one direction when we should’ve gone the other can prove to be very costly.
While not a common occurrence, investors will occasionally find themselves faced with this dilemma as well. Although both approaches have their respective advantages and disadvantages, the challenge is knowing which route is best in a given situation, and why.
Investors, just like anyone else, have limited time to work with; effective time management in investing can help minimize wasted time, and knowing when to prioritize speed or quality is a key component of that.
Thinking of ‘Speed’ and ‘Quality’ as Two Ends of a Spectrum
When talking about speed or quality as it pertains to time management in investing, it’s easy to think of them as mutually exclusive elements. ‘Speed’ means finishing a task as quickly as possible without worrying about the outcome, whereas ‘quality’ is about completing a task regardless of how long it takes.
However, operating at such extremes is usually very rare, and is arguably ill-suited for most situations. Instead, a mix of both elements will always be present.
Think about your own experiences: when completing a task as quickly as possible, chances are you still care about its overall quality. When completing a task meticulously, you know that even an abundance of time is still finite.
Because some element of speed or quality will always be present, it’s best to think of these things not as mutually exclusive, but rather as two ends of a spectrum. This is similar to the idea of a spectrum when deciding to persevere or pivot.
When it comes to investment tasks, the same observation of there being elements of both quality and speed can also be made. Therefore, the aforementioned idea of a spectrum also applies to investing.
Very few, if any, investment tasks can be completed without any regard for their quality, nor can any tasks be completed without considering how much time it takes to complete them.
Now that speed and quality can be thought of as a spectrum, a major question can immediately be raised, and that is “When will investors want to prioritize one over the other?” To help answer this question, in the next two sections, we will go over some examples of when investors will want to prioritize one over the other.
Time Management in Investing – Prioritizing Speed
Throughout an investor’s career, there will be countless times they will be asked to make certain decisions by a specified, unmoving date.
Sometimes the need to complete a task before a certain date is for something routine, such as submitting votes for an annual shareholder meeting.
Other times, the decision to be made is for something very important, such as proposed corporate mergers or buyouts. An example of this was Brookfield Asset Management’s (BAM) impending purchase of the now-defunct Brookfield Property Partners (BPY), which was brought to the attention of BPY unitholders in June 2021.
Unitholders were given a few options for what they could do with their existing BPY units; failure to decide by the deadline meant unitholders were assigned the ‘default’ option, which may or may not have been beneficial to them.
Investors with only a handful of shares/units to their name may not need to stress out too much over submitting their votes for these types of decisions. Despite their limited impact, it’s still good practice to exercise their rights as shareholders/unitholders.
However, as an investor’s portfolio continues to grow, and as the number of shares/units they own increases, then the need to submit their votes on time becomes even greater since they can potentially influence the outcomes of certain votes.
Time Management in Investing – Prioritizing Quality
While there will be instances throughout an investor’s career where they’re faced with an impending deadline, many other tasks they’ll need to perform aren’t bound by such strict time constraints.
A common task where investors will want to prioritize quality over speed is when they perform routine portfolio reviews. Regardless of how often investors choose to carry out this task, it’s important to perform this with the utmost care to discover areas of investment risk, underperforming holdings, and potential sources of growth.
Now, this doesn’t mean investors can drag their feet when performing their reviews, but this certainly isn’t something they want to rush due to its importance.
Similarly, when assessing prospective investment opportunities, this is a task investors will want to complete to the highest level of quality possible. Attempting to rush this work can prove to be very costly if investors miss important details regarding investment merit, which could lead to them selling at a loss or going back and doing even more analytical work to try and find the details they missed.
Again, taking several months to analyze one prospect is excessive (and is no doubt a waste of time), but this is a task investors will want to get right the first time, and to achieve that they must focus on the quality of their work.
Gauging the Best Balance of Speed and Quality
While the examples we’ve previously gone over are more or less clear instances of when investors will want to prioritize speed or quality, there will be times when the choice of what to focus on isn’t as easy to make.
When faced with this grey area, how can investors hope to make a decision? We propose two potential solutions.
One solution is to have a pre-determined preference in mind and to go with that preference in these ambiguous situations. This preference can be determined by an investor’s unique style, level of skill, or individual traits.
Imagine an investor who can work very efficiently without sacrificing the quality of what they do; as a result, they place a greater emphasis on getting their work done quickly. When faced with an ambiguous situation of how to best manage their time, they can go with their preference of moving quickly without having to ruminate which approach to take, saving them time and stress in the process.
Another solution is to assess these ambiguous tasks on a case-by-case basis. Though more cumbersome than automatically going with a pre-determined preference, this may prove to be a better solution for investors who don’t have a preference in mind and may want to carefully understand individual tasks.
Regardless of how investors choose to address this challenge, time management in investing ultimately comes down to what an investor values more when working on a given task. This is something that can remain consistent or vary on an individual basis.
Wrapping Up
Every time we are presented with a task, one of the choices we must make is deciding what to focus on: getting it done quickly or finishing it to the highest level of quality. When it comes to time management in investing, investors must also deal with the same dilemma.
Although ‘speed’ and ‘quality’ are distinct elements, they aren’t mutually exclusive. Rather, they can best be thought of as two ends of a spectrum. There are very few, if any, tasks that will focus entirely on one of these things: some element of both will always be present.
The various tasks that investors deal with will require them to prioritize either speed or quality, but that doesn’t mean the other element is absent – it only plays a lesser role.
Some of the tasks investors will come across will be ambiguous in terms of what to focus on. To help solve this problem, investors can either fall back on a pre-determined preference or assess individual tasks on a case-by-case basis.
