Don’t end up shaped like the number 7
Most of us will not admit it, but we know what FOMO means (Fear Of Missing Out). Not only do most of us know what it means, we probably fall prey to it from time to time, especially in our current era of social media hyper consumption.
There was actually a time when we had to call someone to find out when a plane would leave. That just sounds barbaric. Now we can get up to the minute (second? millisecond?) flight information, sports scores and weather reports. There is nothing the world can hide from us!
This constant state of connection also translates into the financial world. We can get up to the second stocks reports on any company, and trades are performed almost continuously. While this can seem exciting and adrenaline pumping, it can also lead you to unwittingly destroy your finances.
Get Off Your Phone Dad
Smartphones come preloaded with a “stocks” app that gives you up to the second numbers on the major indices and any individual stocks you choose. The problem is that humans are emotional beings, and seeing that line go lower than it was earlier in the day can produce feelings of anxiety that make us want to reach for the panic button and sell.
If we’re investing for things that are decades away, daily fluctuations in the market shouldn’t faze us in the least bit. But they do. So removing ourselves from constantly having to look at prices is the only way to go.
It’s also important to remember that stocks appreciate an average of 8% per year, but if you focus on daily fluctuations and react to news of the latest downturn, you will miss those great returns.
This is not to say we should be totally oblivious to our investment performance. I personally like to take a look every 3 months to readjust my allocation back to where it should be and just check up on the numbers.
Notice I said every 3 months and not every 3 minutes. That’s because daily fluctuations tell you next to nothing, and are only giving you one piece of a thousand piece puzzle. Figuring out where all these pieces of the puzzle go and formulating your long term investment plan is something you need to do.
The other important thing to remember is that the markets will go up and they will go down. That’s just what they do. So a sudden downturn should not surprise you. In some cases a downturn could be just what the doctor ordered because you can buy shares for less than you could before. That will get you on the rocket ship to big returns once the next upswing occurs.
Not only are equities cheaper during a downturn, but dividends can get a little better in some cases as well. That should help lessen the impact of any negative returns. Just remember to re-invest those dividends right away for maximum compounding.
While having all the information the markets have to offer available at your fingertips seems like a technological breakthrough, just looking at it for the sake of consuming information can be very detrimental to your returns.
Keep a cool head and do whatever it takes to stop you from pulling the trigger. If that means turning off the computer for a bit or chatting with your financial advisor, then that’s what you’ll have to do. Taking advantage of the ups as well as the downs is an essential characteristic for any successful investor.
This articles confirms me decision: look less at my portfolio. I am doing ok for my general investing portfolio, but I do badly on my options portfolio.
I now have the plan to automate closing trades and set up alerts. This way, I should be able NOT to look every hour.
Nowadays you can automate everything, so you’re right there is really no need to constantly look at the numbers unless a major world event happens.
I’m not going to lie, I check my company’s stock and another individual stock every single day mainly because it’s right on my home page. It’s counter-productive, though, because I have no plans to sell either in the short-term. I definitely have dealt with FOMO and everyone is so connected these days that it’s completely unnatural not to whip your phone out when you have a spare minute…or second.
Ha yeah I know what you mean. It becomes a habit after a while especially if it’s right on your home page. I guess a good idea would be to remove it from the home page. Out of sight, out of mind.
We are buy-and-hold investors all the way, so I never feel tempted to invest on the fly. I probably miss out on hot deals, but at least I’m not stressing out over them!
I’m a buy and hold guy myself. I’m more than okay with 85% performance with minimal work compared to going crazy trying to squeeze out an extra percent here and there.