Dicing with Investments

I’ve only got so much cash available each month to invest and faced with so many shares, investment trusts and funds, it’s getting very hard to make a decision on which one(s) to invest in.
Actually, funds (or rather trackers) are a little easier as I invest in them every month since they form the bulk of my passive investment strategy and as I’m still aiming to get my allocations close to my Portfolio for All Seasons, I just buy whatever fund is needed to maintain the required allocations.
But shares and investment trusts – there are so many good ones to invest in, which one(s) should I invest in (first) with my hard-earned cash?
Ultimately, I hope to invest in all the companies on my short list (after researching and monitoring) – it’s just a matter of when to pull the trigger, which one to buy now.  The short list changes from time to time as it gets reviewed, some companies drop out of it and others get added to it.

But even with the short list, the choice is still difficult – do I choose Share A over Share B and oh look, Share C is looking rather tasty, so maybe I should go for that one? Oh hang on a minute, Investment Trust D is looking pretty solid too, so why not invest there? But maybe I should just be look at good shares in industrial, telecoms or utilities sectors as I’m a bit light in those areas? How about topping up on a share I already own? Decisions, decisions…my head sometimes feels like it’s going to explode!
Obviously, my problem would be solved if only I could just earn lots more money so that I could invest in all of them at the same time but that’s easier said than done!
I had a bit of a conversation with Dividend Drive in the comments section of his post and I mentioned that I was getting a little stressed from obsessing about trying to get ‘optimum diversification’ for my share portfolio and stressing about which shares to buy.  I mentioned that “the next one I go for will be decided on the roll of a dice or something like that.”
So for this month, to decide on what to invest in, I asked ‘Lady Luck’ to show me which investment to go for (from my short list) – by a roll of the dice.
Was I wrong to do this?
How do other investors choose, when after doing all your research, one investment looks just as good as another and you only have so much money to invest at that particular time?
Gut feeling?
Does a share just ‘jump out at you’ and you know it’s ‘the one’ to buy now?
Well, I’m not going to be doing this every time – maybe only when my head starts hurting!
And before anyone mentions it, if any share/investment trust that I’ve bought this way leads to an epic failure, I won’t be crying and saying “The dice made me do it!”
Anyway, doing this reminded me of a book/part-biography I once read, ‘The Dice Man‘ by Luke Rhinehart, (written in the 70’s) where a man uses dice to make (at times controversial, other times amusing) decisions in his life.

Good job I’m not being so radical!

16 thoughts on “Dicing with Investments

  1. Thanks for the mention, weenie!

    I don't think it is all that bad as long as your short list is well researched. If even after all your research you can't decide and it would be a pretty random–but agonised over–choice then it is simply a method by which to make that agonising go away. Often it is the final decision that is by far the hardest after all, they are all attractive.

    More often, I just sit on the money for a while until something nudges me in one direction or another (like a nice drop in share price). But when you're time limited this is not entirely helpful! This is what I did recently with my WPP top up purchase (not published my write-up on this yet). Their trading update made all the right noises I wanted to hear so I decided to push my funds that way.

  2. As good as any other method! 🙂 At least it wasn't from a random number generator and then you just selected a SEDOL based on that. (Could be a fun experiment though!)

    Happy with what the dice gods chose for you?

    This is part of the reason that stock picking ain't for me. I would become obsessed with the detail.

    Mr Z

  3. Well it was your post DD that prompted me to make the "dice" comment so thank you for helping me find a way to help me make my decision!

    As I make my share purchases as regular investments, thus only incurring the £1.50 charge, I'm unable to just sit on my money, otherwise I will have to wait a full month before I can invest again – this is probably another reason for the agony of being pushed to choose something 'now', or I miss my opportunity!

  4. All other things being equal, not much point tying yourself up in knots – trust your intuition, from my experience its usually pretty reliable!

    Years since I read the book – fascinating.

  5. Hi Mr Z
    Yes, I'm happy with what the dice gods chose for me – I would have been happy with any of them!

    In a way, I'm glad shares only make a small part of my portfolio, otherwise I would totally be obsessed!

    Funny that you should mention the random number generator thing – you've touched upon how I'll be creating my Monkey Portfolio, haha! Still need to get an updated post on that but struggling to do it this month, so likely to be next month now.

  6. Hi DIUK)
    Yes, in the past, I've just been able to just know which one to go for, I was just really struggling this month, maybe because I've got a lot going on.

    Yes, the book was a fascinating read, could be quite a social experiment if done for real!

  7. Hi weenie, I can understand why stock picking becomes so "interesting" (stressful :-)) – all that research. That's one reason I don't do it at the moment.

    Rolling a dice sounds a very reasonable way to force yourself to take action when your brain has whirred it's way round all the figures and still come to a stale mate. Good luck

  8. Thanks Cerridwen – as I'm happy with the choice the dice made, feel good and positive about it, means my brain can worry about something else!
    Hope you have a good weekend!

  9. Hi Weenie,

    I don't think you should stress too much. If the choice is between a couple of shares that you've identified as good prospects, just pick one. Don't worry as you'll probably be able to get the other one next time… and maybe on a discount!

    Keep up the good work.

  10. Hi Simon
    I will try not to get stressed each time – it's mind over matter! Passive investing works for me but a bit of active investing helps keep me motivated and interested! You're right on the discount thing too – I'll keep an eye out for that!
    Thanks for stopping by – I had a quick look at your blog too, good luck with your own journey!

  11. We all roll the dice (to a degree) every time we invest. I choose to invest via Vanguard funds these days… decided life is too short for taking time to invest in individual stocks. Buying monthly like you i think i am still rolling the dice, just the dice has around 2,900 sides…. & it lands on all the sides ;-).

    RDWHAHB 🙂

  12. Hi LCIL

    Picking individual stocks is only a small part of my investing and I'll carry on until it does get too much, whereby I will just revert to full passive investing via Vanguard!

    "RDWHAHB" – I had to Google it to see what it meant but brilliant, thanks, not heard of that before but very apt!

    "Relax, Don't Worry, Have A Home Brew"

    Speaking of which, I do have an update on my latest brew! 🙂

    Thanks for stopping by!

  13. I forgot that you use regular investments. I probably would as well if I had the facility to do so! It does make the need to make a decision more pressing. Better get those dice ready, I guess!

  14. Oh i get it now – your own Monkey Portfolio. I will be interested to see how this turns out. I have been trying to stick to ETFs but once in awhile can't resist an individual stock pick. If you think you have a group of good ones – a roll of the dice can't hurt.

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge