Take a real break — not just a pause

The biggest risk is being invested at all times

When I was a hedge fund manager, we took two full breaks of a month each. We sold all our positions and just sat on the cash. During the hiatus we honed our pitches for our old and potantially new positions, as well as our arguments for why some of the other managers’ positions shouldn’t be let back in. Then we re-invested from scratch with fresh minds.

This process cost a few tens of a per cent per break in terms of spreads and commission, and possibly theoretically half a per cent in lost returns. Let’s say we left a full per cent of returns on the table per year due to the roundabout. However, I dare say we gained much more in perspective and fresh analysis.

Okay, I’ll come clean. We actually only discussed implenting hard breaks like outlined above, but never had the guts to do it. I still think we should have, but I think two things stopped us:

  1. convention – what would clients say, in particular if prices moved favorably for the portfolio we just sold
  2. fear – we were afraid we would either become lazy and just use the breaks for leisure, or that we would be afraid to put on our positions again, in particular the best ones if they had become more expensive

No matter, breaks are a part of the human condition. We aren’t designed for going full throttle all the time. There’s a reason we sleep.

However, “take a break” does not mean being passive, it means shaking things up, doing other things rather than nothing. At the gym, supersetting could be a break from old habits. Personally, travel is a way of taking a break from my ususal surroundings — just note that it probably shouldn’t mean lying on the beach or by the pool all week. See something new, talk to a stranger, try new food, read a book instead of computer screens.

Take stock

What’s your current situation? Perhaps you trade the stock market all day, go to the gym three times a week and hit the bar 1-2 times a week. Perhaps a good non-fiction book would be the perfect break for you, i.e.,  a slow, long focus activity as opposed to all the adrenaline you usually get.

I’ll tell you a trick that keeps surprising me: Take a walk.

No matter how you’re feeling or what you’re doing, if you just get outside and start walking round the block, you’ll suddenly feel much much better. I know this, and I practice it a lot (thankfully I have a dog, so I get out at least 3 times a day). Nevertheless, I’m often struck by how clear and relieved I feel after just 20 seconds outside.

Sometimes, I might be procrastinating over buying groceries, posting the mail, running an errand, or just going downtown to buy new underwear. Somehow I think it’s a hassle, until I just do it, and realize (again!) how everyting becomes brighter and easier as soon as my feet hit the sidewalk. It definitely beats watching TV in the sofa (even if that feels more tempting right before). Even vacuuming the apartment is refreshing once I muster the strength to just start the damn thing :D

Alright, walks are good, you get it. But the real message here is to take breaks, to go against your habits, to stop the homeostasis. The message is to take active breaks where you do something different, rather than taking a break to do nothing.

  • Do you read a lot? Then write!
  • Do you write a lot? The talk!
  • Do you run a lot? Then lift heavy things!
  • Do you have a lot of indoor sitting meetings? Then take walking meetings outside!

I’m a bit of a loner, so my breaks often entail meeting people. I can’t say it charges me, quite the opposite in the short term. But I appreciate my normal activities all the more, and I gain perspective from it.

When it comes to investing, these days I definitely take complete breaks from considering public companies’ financials. That way, I can start over completely fresh from psychological anchoring points. What I do during my breaks from stocks? I read books I didn’t think I would, and I try new podcasts or podcast episodes that I’m not sure I’ll like (my habit is to only listen to topics and people I’m pretty sure I’ll enjoy and learn useful things from).

In particular regarding investing on the stock market, the most important rule there is is “never rush“. Investing is a game of several decades. In that perspective a month here or there is completely inconsequential, whereas the gained insight can prove invulauable.

When did you last take a constructive break? And from what to what?

Here is a tip: plan a strategic getaway, where you alone, or you and your life partner, or you and your business partner travel to a quiet location. Leave all electronics behind and spend, e.g., 2-6 full days planning your life from a several months to several years perspective. Try to take everything into account: personal development, financial goals, realtionships, health etc.

If that isn’t a REAL, ACTIVE BREAK, I don’t know what is. As a bonus, you’ll get to practice mindfulness, deep work, and loosen social media’s addictive grip on you.


If you like my writing you really should check out my podcast Future Skills, which discusses habits, tools and role models that keep you relevant in a future of accelerating technological and societal change.

The show has three kinds of episodes: 1) short, one-idea regular episodes, 2) longer format interviews with authors, researchers, investors etc., 3) medium-length expert episodes and a specific theme.

Check it out, and please leave a rating or review on iTunes to help others find the show.

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3 Comments

  1. Changing it up also makes time pass slow. You don’t realize how much of your time is eaten up by a homeostatic rut (of hours or years) until you jump the track and find yourself hurtling over curbs, shrubs, and surprised pedestrians. Er, so to speak.

  2. Want to clarify something real quick. Two full consecutive months sitting on cash, out of 10 years running a book an accumulated two months not invested? The latter seems more probable, just want to double check.

    I agree with taking a look at positions and ideas with a fresh mind periodically, though at the end of the day I think the LPs have a lot of say in terms investing style, as much as they say they won’t intervene. Possibly the same within an organization, PMs not putting in analyst positions due to his/her own biases, and vice versa. But that’s a whole other issue. Would be great if you could comment on this particular issue if you have the time.

    • edit above:

      Two full consecutive months sitting on cash out of 10 years running a book, or an accumulated two months not invested?

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