I Am Not My Stock Price

If you are an founder or employee of a public company, repeat after me:

I am not my stock price.”

This is one of my favorite Jeff Bezos quotes.

It’s easily to get bummed out when your stock price drops. I believe the emotions follow the +1/-5 rule. Each time it goes up, you get one unit of happiness. Each time it goes down, you get -5 units of happiness.

Think about that for a second. If you look at the stock price every day the market is open, you’ll look at it about 250 times a year. Let’s assume that your stock is higher at the end of the year, but that on 125 days it goes up, and 125 days it goes down. You’ll have +125 happiness for the up days and -625 happiness for the down days. Even though your stock price is higher at the end of the year, you’ll have -500 happiness points.

Now, in the above case, if you only look at your stock at the end of each month, you’ll have 6 up days and 6 down days. That’s +6 – 30 = -24 happiness points. Still unhappy, but less so.

If you look at the stock only one time at the end of the year, you’ll have +1 happiness points.

Lesson: Don’t look at your stock price. Run your business. Work in your business. Do amazing things. Build value. Derive your happiness from the amazing things you are doing for your customers, the great people you work with, and the mission that you are on. Oh – and all the great things in the rest of your life outside of work.

Remember: You are not your stock price.

  • http://sotirov.com/ Emil Sotirov

    And I am not my net worth.

    • http://www.traipsingabout.com/ Dakota Gale

      Totally agree with this. Some of the poorest people I know are not only the happiest, but the most interesting! Trying to have our cake and eat it too – success and happiness – is the trick. A good daily challenge!

  • http://www.larry.com/ LE

    Don’t look at your stock price. Run your business. Work in your business. Do amazing things. Build value.

    Agree. Live by the sword die by the sword (or get depressed, whatever).

    This goes along with my thinking on two related concepts.

    1) Don’t manage your weight loss by the scale. It’s not that accurate (water retention, when you last did you know what, etc.) Instead, manage by clothing feel. In other words, analog not digital. You will know when you are in the right direction and not suffer any anxiety (or false exhilaration from the positives). I will shoot the next person that says “I was good today”.

    2) Stop thinking that in every business situation you have to manage by numbers (despite what Meg Whitman might say about the issue.) If you ask any small business owner how they are doing many times they will know simply by the tempo of the phones ringing or how busy the shop is or how fast the employees are moving. No need to have precise numbers (for many situations). [1] Or the lines at the ski slopes.

    Do the best job you can, everyday, and work hard and good things will follow.

    [1] This becomes a crutch and a time waster for many. Pouring over spreadsheets and data doesn’t create any value in many cases. It’s just a displacement activity because it’s more comfortable than improving a product or bonding with a customer.

  • LisaPNevarez

    Even though your stock price is higher at the end of the year, you’ll have -500 happiness points. http://num.to/4788-7890-5061

  • http://gosphero.com Paul Berberian

    OK this was the advice I kept getting from the board at Raindance. I agree in general don’t obsess but if you are the CEO you can’t just say “screw the stock price.” You have investors, employees, partners, potential buyers, and potential targets who look at your stock price and need to manage their happiness level. You need to compartmentalize the stock price like you do everything in the business. You can’t go home every night and carry every employees concern with you – the stock price is just a thing and you can manage it.

    When RNDC hit 74 cents we were trading below cash (we had no debt BTW). Our cash account was worth more than our company. So how do you manage the stock price – you tell the story to your investors and prospective investors. You tell the story to your employees why the value of the company is not the value of the stock. You tell the story to potential targets that if they do a deal with you they will see the stock rise in the future as you build a great business.

    But if you don’t manage the story – then the stock price tells its own story to the world.

    So I agree don’t internalize the stock price to drive your happiness but I disagree that you shouldn’t look at it. If your stock plummets you need to know why and tell the story around it. You can ignore minor fluctuations but ignoring the health of your stock price is the same as ignoring a big morale issue. BTW if your company is unreasonably overvalued you need to tell that story too because it may come back down some day.

    It is al just part of the job that you signed up for when going public.

    • http://www.feld.com bfeld

      I didn’t say “screw the stock price.”

      You are correct that if you are the CEO or CFO, you will likely need to pay attention on a daily basis, or when there is a meaningful move. But that’s different than investing emotional energy in it.

      Next time I write this particular rant I’ll be clearer on that.

      • http://gosphero.com Paul Berberian

        I agreeIt is important but not for happiness or self worth.