Avoid looking at your portfolio

Most people have heard of an investing tip. This often involves getting some info on a stock that is considered a “sure bet.” Other tips involve general strategies on how to invest or how to approach the markets. However, as explained by Michael Batnick of Ritholtz Wealth Management during an appearance on CNBC, there’s a very simple tip that most investors can follow that would benefit their portfolio: Don’t look at your portfolio too much. That’s it.

Short-term distractions

But Batnick’s logic is very simple. He says that the more an investor looks at their portfolio, the more likely they are to see losses, which may adversely affect their investment decision-making. And the numbers appear to back up his claims.

If you check your portfolio on a daily basis, there is a 46-percent chance of seeing negative turns. If you only check the portfolio once a month, the likelihood of a negative return goes down to 36 percent, and if you have the “hutzpah,” as Batnick puts it, to look at your portfolio only once a year, the chance of seeing a negative return goes all the way down to 26 percent.

Long-term objectives

Now, as simple as this may all seem, there are two conclusions to draw from this information. First, the amount of times you look at portfolio has nothing to do with how it performs. That should be made clear from the outset. Short-term losses happen, but they even out over the long-term. However, what this information does point out, and is the second conclusion to draw, is that the outlook one has towards an investment portfolio is crucial.

In fact, this is something that we keep stressing on these pages over and over again. Investors should not fall into the trap of listening to the day-to-day panic machine of the public markets. Markets go up. They go down. Regardless of what we do. It’s just a matter of setting long-term investing strategies that meet objectives — and sticking to them. That way, you don’t have to look at your portfolio everyday and worry needlessly.

ASCEND GRP is an asset-management firm, with offices in Toronto, Richmond Hill, and New York, that services clients seeking investment opportunities worldwide.


Short-term versus long-term analysis

There have been a few themes discussed on these pages that might seem a bit repetitive, or even wrongheaded to some, so it’s nice to see when others in the investing world are saying some of the same things.

Specifically, Tom Bradley, president of Steadyhand Investment Funds, writes in the Financial Post about the need to minimize some of the hype surrounding things like U.S. President Donald Trump, and even Brexit. According to Bradley, they will have minimal impact on long-term investing, and the political shock they have brought to the world of investing should have already been discounted by now.

Avoid hyperventilating

Indeed, this is something discussed on these pages for some time now. People have hyperventilated about Trump ever since he announced his presidential run, and certainly since he won the presidency. This is not in any way an endorsement of Trump, but a reminder that the world, including the world of investing, is much bigger than he is, or any other president.

Instead, Bradley talks about two long-term factors that investors should start taking more seriously instead of watching too much cable news. The first is debt — and he’s talking about all debt; that being accumulated by households and governments. It’s growing, and getting out of hand.

Sustainable trends

The second long-term factor is the growing middle class — around the world. This is something that has been happening in China in recent decades, and is now also occurring in places such as India and other regions of Asia in particular.

What’s fascinating about Bradley’s analysis is that he says both factors — debt and the middle class — have contributed to world economic growth in recent years. However, he says the first, debt, is not sustainable, and there will be a reckoning, sooner or later. You can only keep borrowing money for so long. But, the second factor, the growing middle class, should serve as a counter-balance, since it will continue to happen for the foreseeable future.

ASCEND GRP is an asset-management firm, with offices in Toronto, Richmond Hill, and New York, that services clients seeking investment opportunities worldwide.

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