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.
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.
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.