I stopped buying active investments (individual stocks, etc.) a few years ago. I've gone through different justifications for why too.
Originally I stopped buying active investments because of the performance argument. You've probably heard it before. If 85% of active stock managers can't beat the market over 10 years, what makes you think you can?
This argument worked for a while, but then I shifted my thinking to the existential argument. This is the idea that you shouldn't try picking stocks because it's too hard to know if you're actually good. Because there is so much luck involved (especially over shorter time periods), you are better off not wasting your time trying to figure it out.
But today, I have a different argument. Today, I don't make active investments because you can't put a price on mental freedom. What I've realized about myself (and many others I've spoken to) is that when you buy an active investment like an individual stock, that investment consumes a lot of your attention.
I remember the feeling when I was in my early 20s. I'd have $1,000 in a single stock and check its price multiple times a day. At the same time, I might have 20 or 30 times more money in the S&P 500 and not blink an eye. I might've checked it once a week. Why is this?
While I can't speak for other investors, I can tell you why I did it—my ego. My investor identity that was at stake. I don't identify with the S&P 500. I don't identify with index funds. When they drop by 10% or 20%, it's no big deal because it's out of my control.
But that wasn't true with the active investments I made. Anytime I bought an individual stock it was no longer "no big deal." On the contrary, every active investment I ever made was a conscious decision to go against the default advice (i.e., buying an index fund). And in doing so, I chained my ego to the outcome of that decision. If my stock went up, I was a genius. If it went down, I was an idiot.
Despite being simplistic, this is what's happening inside our heads when we make such investments. We attach our egos to what we choose to invest in. I don't think there's anything wrong with this, but what happens when that investment ends up monopolizing our attention? In this case, the costs can be far greater than what the investment would've earned us.
I'm not trying to be dramatic either. Even if I spent 20 minutes a day "checking" these active investments in my early 20s, that ends up being around 80 hours a year. Do you think that 80 hours a year in my early 20s could've been better spent on anything else? Easily. Every minute I was checking stock prices I could've been writing or coding or whatever.
The real cost of active investments isn't the likely underperformance or the existential dread, it's the mental distraction you create for yourself. It's the time you could've been doing things you're probably better at.
Some people enjoy the process of stock picking and that's fine. But I don't. I have far better things I could be doing with my time. I could be writing. I could be at the gym. I could be talking with my family or building calculators for this website. That's what active investing costs me. What does it cost you?
This argument goes far beyond active investing though. It comes down to how we use our attention everywhere else in our lives as well. Unfortunately, we've never been less in control of our attention than today. The Tik-tokificaton of the internet has made short form video the dominant medium across every social media platform. They've made it too easy to get sucked into this stuff.
This explains why screen time keeps rising and young people are spending more time alone than ever before. As the chart below from the FT illustrates, in 2023 young people spent 4x more time gaming, 75% more time on social media, and about 25% less time socializing than young people did in 2010:
Do you see what's happening? We are being pacified with digital bread and circuses while the owners of these platforms continue to get wealthier and more powerful. And they are using those resources to further entrench themselves in the media, the government, and other parts of our lives.
I struggle with phone addiction too. Since I create content online, I can justify my social media usage as research. But deep down, I know that's just an excuse. Because even I find myself going down these entertainment rabbit holes. 30 minutes can vanish in the blink of an eye.
But recently I've been fighting back. And I'm doing it in the same way I fought back against active investing—by remembering my identity. I remember that every hour I spend mindlessly scrolling on social media is an hour I'm not using toward my ultimate aspirations. It's an hour I'm not being a financial writer or a data scientist. It's an hour I'm not interacting with my fiancee, my family, or my friends.
When you start viewing your life in this way, it becomes much easier to break these old patterns and focus on what really matters. Because while you're focusing on the tariff war, how many kids Elon Musk has, or whatever else is dominating the news cycle, the people managing these systems are getting richer and richer. And they are doing it at the expense of your most important asset—your time and attention.
So, what are you going to do? But, more importantly, who do you want to be? Figure that out and the rest will fall into place. Because you can't put a price on mental freedom.
Thank you for reading.
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This is post 451. Any code I have related to this post can be found here with the same numbering: https://github.com/nmaggiulli/of-dollars-and-data