Help me recoup bonehead $50G move

[RetiredAtThirty-eight]

I haven't even taken a peek at my investment balances since last time I rebalanced which was at the start of the year.

I'm stubbornly sticking to my plan of only rebalancing one a year so really doesn't do any good to start staring at every change.

For grins, I do see (but not rebalance) how thing are at end of every quarter. So, I will take a peek come 4/1.

Is this some kind of twisted version of "See no evil, speak no evil, hear no evil"?

Seriously though, if that's what it takes to keep your hands off it, more power to you! I just know myself well enough to know I couldn't help but peek.

 

[easysurfer]

Is this some kind of twisted version of "See no evil, speak no evil, hear no evil"?

Seriously though, if that's what it takes to keep your hands off it, more power to you! I just know myself well enough to know I couldn't help but peek.

This is more about practicing self-discipline. Kinda like don't eat that first potato chip as if you do, then 20 minutes later, you've downed the entire bag .

What the market does day to day I really can't control, so not gonna obsess over that.

 

[OldShooter]

Is this some kind of twisted version of "See no evil, speak no evil, hear no evil"? ...

Actually, though I can't give you a citation, I have read about a study that showed that people who looked too often got poorer returns.

The behavioral finance folks blame this on our human risk aversion. If we watch all the zigs upwards and the zags downward, the zags tend to wear on us more than the zigs encourage us. Upshot is that people are more biased to sell rather than to stay the course.

I have read that the Schwab robot actually chides clients who look too often, telling them that successful investors do not.

We haven't looked in detail at our portfolio either. We were 75/25 and I'm sure that is history of course. But the 25 was designed to carry us for around 5 years without any equity sales. We'll re-look that in December during our annual portfolio review.

 

[RetiredAtThirty-eight]

Actually, though I can't give you a citation, I have read about a study that showed that people who looked too often got poorer returns.

The behavioral finance folks blame this on our human risk aversion. If we watch all the zigs upwards and the zags downward, the zags tend to wear on us more than the zigs encourage us. Upshot is that people are more biased to sell rather than to stay the course.

I have read that the Schwab robot actually chides clients who look too often, telling them that successful investors do not.

I have had a Schwab account for over 20 years and I don't think that's true. At least I've never been chided for looking at our accounts and I actively manage them almost every day.

When I say "actively manage" I don't mean I buy/sell every day, far from it. It just means that I look at them and research what's going on with the companies and the markets. I do this with a long-term view and perspective. I can typically count my annual trades on my own fingers, maybe needing a few toes during an especially busy year.

Here's the thing: It's not the looking that can lower your returns, it's the buying/selling when buying and selling is not warranted. Investing takes great discipline. I know I'm going to look at my holdings, the discipline for me is in only making trades that are likely to increase my overall performance.

I think humans, in general, are ill-suited to investing their own money. And yes, it's mostly due to risk aversion. Which is, in turn, mostly due to being too attached to their money. However, if you can solve the latter problem, the former problem no longer exists.

 

[easysurfer]

Perhaps a good comparison is like going on the scale while on a diet. How many times for the weigh in is enough vs too much?

 

[OldShooter]

I have had a Schwab account for over 20 years and I don't think that's true. At least I've never been chided for looking at our accounts and I actively manage them almost every day. ...

I don't think you have a robot account.

... Here's the thing: It's not the looking that can lower your returns, it's the buying/selling when buying and selling is not warranted. Investing takes great discipline. ...

True enough. The study didn't say that every frequent-looker failed, just that on average they did.

Your implication, though, that not looking at one's account is somehow "twisted" is at best simply silly and at worst, insulting.

 

[RetiredAtThirty-eight]

I don't think you have a robot account.

True enough. The study didn't say that every frequent-looker failed, just that on average they did.

Your implication, though, that not looking at one's account is somehow "twisted" is at best simply silly and at worst, insulting.

I'm sorry, it wasn't my intention to be silly or insulting. It was a light-hearted look at how we all do things differently. That's why my next sentence began with "Seriously though", letting you know that I was only kidding. I have just never been one who thought it was better to not know than to know. If my account is down, it's down. It doesn't stress me out.

To elaborate a little more, watching how the market values my investments on a day to day basis, helps me understand how the market moves and how various news and events are reflected in the valuation.

 

[OldShooter]

... To elaborate a little more, watching how the market values my investments on a day to day basis, helps me understand how the market moves and how various news and events are reflected in the valuation.

Interesting. I tell the students in my Adult-Ed investing class that looking at daily action is a huge waste of time and to absolutely not do it. I suggest looking once a year.

Modern Portfolio Theory, which has survived now for close to 70 years is based on the observation that stock prices vary randomly but with a small upward bias. The bias is why buy and hold works.

 

[RetiredAtThirty-eight]

Interesting. I tell the students in my Adult-Ed investing class that looking at daily action is a huge waste of time and to absolutely not do it. I suggest looking once a year.

Modern Portfolio Theory, which has survived now for close to 70 years is based on the observation that stock prices vary randomly but with a small upward bias. The bias is why buy and hold works.

I think following MPT is a good idea for most people and I'm a huge proponent of buy and hold investing but I don't subscribe to the theory that stock picking can't work and I don't hold stocks forever (my average holding period is around 5-8 years). I've never owned an index fund or a broad-based mutual fund in my 30 plus years of investing and my returns are better off for it. I also don't do regular portfolio rebalancing and my lack of diversification would shock many professional money managers. I do it this way because I think too high of a premium is put on minimizing volatility. My belief is that since saving is a lifetime endeavor, volatility only matters as you near the end of life. What really matters a lot are actual average returns.

People need to do what works for them and I applaud you for teaching a method that works for most of the people, most of the time. But I do think you're being a bit rigid when you tell every student to absolutely not look at their brokerage account on a regular basis (even if it is probably good advice for most of them).

 

[easysurfer]

I'm sorry, it wasn't my intention to be silly or insulting. It was a light-hearted look at we all do things differently. ...

I didn't think anything that you said was trying to be silly or insulting.

My rationale for not checking how things are doing so often is the same as refraining from looking at a car wreck on the side of the road or the gory parts of a horror movie. The market tanking is like a horror movie and I already know my dollar balance is going to drop by a good amount.

So, I try not to dwell. Instead, at times when the market tanks I trick my mind into thinking, for each purchase I DCA in the market index fund, I'll be buying more shares than in an up market.

My strategy is when in a bull market run, okay to focus on balances. When market tanks, focus on shares. Heads I win, tails I win .

 

[RetiredAtThirty-eight]

My rationale for not checking how things are doing so often is the same as refraining from looking at a car wreck on the side of the road or the gory parts of a horror movie. The market tanking is like a horror movie and I already know my dollar balance is going to drop by a good amount.

So, I try not to dwell. Instead, at times when the market tanks I trick my mind into thinking, for each purchase I DCA in the market index fund, I'll be buying more shares than in an up market.

My strategy is when in a bull market run, okay to focus on balances. When market tanks, focus on shares. Heads I win, tails I win .

I understand. I call that a "fair-weather investor", LOL!

 

[OldShooter]

... I think too high of a premium is put on minimizing volatility. My belief is that since saving is a lifetime endeavor, volatility only matters as you near the end of life. What really matters a lot are actual average returns. ...

Well, we can agree on that for sure. In the accumulation phase with DCA, volatility is actually your friend. In retirement it is mostly a don't-care as long as SORR is handled with an adequate fixed income allocation aka bucket.

IMO Markowitz did investing a great disservice when he decided to equate volatility and risk. They are not the same, but doing this gave him something that he could measure numerically and play mathematical games with.

... But I do think you're being a bit rigid when you tell every student to absolutely not look at their brokerage account on a regular basis (even if it is probably good advice for most of them).

It doesn't matter. They will ignore this advice but hopefully they will look less often.