Long ago, tracking your investment portfolio meant waiting for the morning paper and sifting through pages of ticker symbols in the business section to find out what price your stocks closed at the prior day. In order to make a trade you had to pick up the phone and call your financial advisor or broker. If you talk to people about what it was like back then, they’ll likely tell you about walking uphill both to and from school. They’ll tell you about how they only had 3 TV stations, and they liked it!
Ok, maybe it wasn’t that long ago. Still…today Twitter brings us the news in real-time, we can get streaming quotes on all our investments from a number of websites, and we can buy or sell any stock instantly with just the click of a button.
We live in a world of “now” and we’re better off for it. Or are we?
Having this constant stream of information can be a double-edged sword when it comes to our money and our portfolios. On one hand if some really bad news breaks about a company we own, we can act on the information quickly and hopefully save ourselves from major losses (Example: BP’s gulf oil spill). On the other hand, too much information can lead us to make impatient, emotional decisions (Example: Any stock that’s dropped like a rock after missing an earnings estimate by 0.01).
Often the question becomes: “How often should I be checking up on my portfolio?”
The answer is: “As often as you are comfortable doing so.”
I know, I know. That answer sounds like a cheap cop-out and you’re mad I made you read 200 words to get there, but hear me out…
Some people, myself included, like to track their investments constantly. When I’m at work I always have a browser tab open to Google Finance so I can keep track of what the market is doing and which of my stocks are up or down at any given moment. For me, it’s part of the fun of being an investor. I like to feel connected and in tune with what’s going on at all times. It’s definitely not important to monitor things constantly and for most people this would lead to more harm than good. If you’re going to constantly monitor your positions you must be able to keep your long-term focus and refrain from getting too emotional over day-to-day movements in price.
For other people, checking in weekly or even monthly is their preferred monitoring period. Just often enough to keep in touch with the important happenings and to have an overall feel for how their investments are performing.
Weekly may still be too often for some investors. I know plenty of people who track their portfolio’s simply by glancing at the quarterly statements that come in the mail from their 401k provider or brokerage firm. Honestly if you’re a passive, long-term investor this is really all you need to do. Check in on your portfolio once in a while to see if it needs rebalancing to maintain your set asset allocation.
Some people prefer not to watch things at all. They may check in once a year and sell their losers for tax purposes or they may just leave everything in the hands of a professional.
Obviously there is a pretty broad spectrum of ways people check their investments. None of these ways is more right or wrong than any other. As I mentioned, I can watch my stocks all day every day and shrug off any big daily gains or losses. My girlfriend breaks out into a nervous sweat if one of her stocks closes in the red by the slightest bit. Monitoring the daily ebbs and flows of the market would probably put her into a mental institution by the end of the year so she takes a more hands off approach.
The real lesson here is that it doesn’t matter how often we check our investments. It’s how often we’re buying or selling that counts.
We should really only make major changes to our portfolios once or twice per year to rebalance our portfolios to stay in line with the asset allocation we’ve chosen for ourselves. If you feel the need to make major moves every time a CNBC talking head yells “buy!” or “sell!” it’s probably better to monitor things less closely. The same goes if short-term moves in the market cause you to get really high or low emotionally. Emotion is one of the worst enemies of good investing decisions. You don’t want to end up sabotaging your long-term goals because you panicked when the market dropped for 2 straight weeks!
Whether you choose to keep up to date on the minute by minute moves of the stock market, or you like to watch from afar. It’s important to focus only on the things you can control. Focus on making money, saving as much of it as possible, putting your money to work, and sticking to your long-term investment strategy.
How often do you check in on your investments? Does following your investments more closely tempt you to make more trades than you otherwise would?