By Brad Beckstrom
I purchased my first mutual fund about 6 months before Black Monday in 1987. We didn’t have the internet or online investing. Not even email! That was so sweet. Imagine going through your workday largely uninterrupted. When I was a field employee in my first real job, pretty much everything came through the US mail. Our 401(k) statements came quarterly. Savings Bonds were in a drawer, and mutual fund statements came monthly, but only after I had consolidated a few of them into a brokerage account.
Then everything changed.
First came 24/7 cable news with tickers, then in the 90s things really took off with the introduction of websites like Yahoo Finance. In the late 90s everyone was talking about or buying some sort of tech stock. Then they would watch the stocks along with their company stocks or mutual funds in online portfolio trackers. Most didn’t actually link to your investment account yet, but you could manually enter your shares and ticker symbols.
For investors these trackers just became more and more user-friendly and visually appealing, (at least when they were green and the markets were going up). When smartphones came along around 2007, the smooth user interface on investment tracking apps fanned the flames of obsessive market checking. A stocks app was even built into the original iPhone homepage, launching a whole new generation of market checkers.
Obsessively checking the markets, in my opinion, is like constantly looking at news notifications. It’s distracting and it creates unnecessary stress about things that are outside of your circle of control.
I mean, honestly, how does it make you feel when you see the latest political shocker notification or updates that the stock market is down 450 points based on a Tweet? At the minimum it’s distracting, and creates unnecessary worry over short-term events you have absolutely no control over.
Early in the 2008 financial crisis I decided to stop looking at any tracking apps or finance websites during the week. In the worst of this, I would skip a couple months of brokerage statements then later download and reconcile them in Quicken after things had calmed down a bit. I had a financial strategy and I stuck to it. The time to make these plans is before recessions and market corrections.
How to Set It, Forget It, and Stick to Your Strategy.
If you are excessively checking your investments you are more apt to sell off stocks at the worst time or make other rash decisions that will hurt your long-term returns. A few years back Fidelity Investments did a study of top performing accounts among individual investors. What they found was amazing. The best performing accounts belonged to people who had forgotten about them, or were dead. That’s correct, dead.
Luckily there are lots of ways to feel good about your investments and stop obsessively checking the news and the markets. Here are a few of my favorites:
- Take some time now to develop your own personal investment strategy. It’s important to write this down. As an example, I created my own investment strategy using low-cost mutual funds.
- If you have accounts from old employers or random mutual funds and other investments, it’s important consolidate them and track them in one place. I’ve used Quicken for years, as it lets me automatically download all of my bank and investment account transactions and balances. I also use it to pay bills every week or so and reconcile investment accounts just once a month.
- There are several excellent online tools that will give you a simple, consolidated weekly email showing how how your investments did over the past week. Two I’ve used and liked are Wikinvest and Personal Capital. These consolidated emails allow you to miss lot of the market volatility and still keep a eye on your account once a week or once a month.
Here is the tidy weekly email summary of the You Index vs. the markets. Checking weekly or monthly smooths out the ride.
They also include a detailed spending vs. income summary when you add your credit card and bank accounts.
Currently I have all of my accounts tracked in Personal Capital, this includes brokerage accounts, bank accounts, health savings accounts (HSAs), 529 college savings plans, treasury direct accounts, and real estate (they track your home property’s value in Zillow and make it part of your total net worth). Trying to track all of these individually and get a good picture of our net worth and asset allocations would be a major hassle. Personal capital allows me to automatically track all of this in one place and also smooths out the ride by giving me a total performance picture of all investments combined versus individual investment accounts that may move wildly during market volatility.
Now, next time you want to check the markets you can just go for a walk instead.