Markets, Moods, and Checking your Stock Performance
When stocks rise, we want to see how well we are doing. When stocks tank, well, we can put off checking on them for now. I bet you do this. I know that I do. Swings in the market shift our moods and turns on and off our wish to check our stock performance. When the markets are moving up as we suffer a bit of FOMO (Fear of Missing Out) and get eager to trade. When the market swings down, we often don’t want to look at our bad performance. We suffer a form of investment paralysis.
Up markets and excessive examination of your portfolio can be as addictive as social media, checking stock returns multiple times per day. It is so easy to do on your cell phone. It is a waste of time. Checking stocks too frequently has several problematic side effects. It can lead you to trade more often than you should, causing tax consequences for your taxable accounts. It tends to lead you to jump into the latest trends just as they are reaching their peak. We’ve all seen investors rush to buy gold, or bitcoin, or marijuana stocks after they have risen. Herd mentality strikes and you want to invest only in the winners. You forget your intention to diversify and invest for the long term.
Down markets offer emotional anguish. We feel disappointment with our investing skills. We strive to avoid pain, so we end up not looking at stock performance much like those who take sabbaticals from Facebook as social media addicts. This can lead us in two directions. One is the panic selling of everything right now. This will stop the immediate pain, but we often find we stay in money market accounts too long and miss the upturns that eventually come. Or, we stay with our buy-and-hold strategy and find that by not looking, eventually we learn our portfolio is coming back. When you see you are checking too often or not ever, you know you are impacted by moods and the market swings. Use some of your time wasted checking stocks and spend it in carefully writing a plan for your investments instead.