Don’t check your stock prices
February 10th, 2007 by digerati
Don’t check the prices of stocks every day, it’s a waste of time.
The long-term investor has no need to check the prices more than infrequently, say quarterly. Paying attention to daily or weekly prices are likely only to cause stress as you worry about your projections from today’s price changes.
It is far more important to create a solid infrastructure for your finances so that you don’t need to worry about the prices except when rebalancing your portfolio.
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The Financial Ladder Says
I compromise. Once a month when compiling my net worth…
Feb 10th, 2007 at 10:42 am
fin_indie Says
That approach only works if you are an indexing type of investor. If you play sectors or have any trades that you are currently involved in, you had better be keeping tabs, especially during earnings season. For long term investors who basically practice buy and hold on indexes, you may be right. Buy and hold on long term stocks may also work, but you can also get burned that way if big, sudden news hits a company you are invested in and makes a stock drop below previous support levels. Again, trading vs investing is key on this advice.
Feb 10th, 2007 at 7:53 pm
Enough Wealth Says
I check stock prices if I’m considering buying or selling a particular stock. I also get the total value of my stock portfolio each day - both for a bit of fun (updating my net worth spreadsheet), and for the practical reason that sometimes I need to know the margin utilization on my margin loan accounts, or how much margin loan credit I have available to take up a new IPO offer, stock issue or new stock purchase. I don’t think daily price checks will stress you out if you have a truly long-term outlook. The test comes when the market has a “bad day” and your portfolio value drops, say, $10,000 in a day. If this worries you, you shouldn’t be checking prices daily. If you think, ah well, whatever. Then it doesn’t hurt to check prices each day.
Then again, I really can’t think of any reasons why you’d actually need to check prices daily.
I do find that by checking prices daily you can develop an odd mindset - you think nothing of the market movement making or losing you thousands of dollars (on paper), yet you still worry about saving a few cents buying groceries on special, or gas at the best price.
One positive is that you don’t stress out so much about some other things - for example whether I get a 2% or a 10% raise this year won’t really trouble me, as one good or bad day in the market could make more difference to my net worth.
Regards
http://enoughwealth.blogspot.com
Feb 10th, 2007 at 9:43 pm
digerati Says
The issue is not for those who are required to micro-manage investments, but for the typical investor.
We saw the same problem in the army when it became possible for a general to watch the actions of individual soldiers. They became fascinated with the available data and could get locked into that micromanaged perspective on the war rather than their job of constructing an overall strategy.
Feb 11th, 2007 at 12:52 am