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“TAKE FIVE” IS JAZZ great Dave Brubeck’s most popular and enduring number—but it’s also a darn good piece of decision-making advice.
A few weeks ago, my son was struggling with exams and papers ahead of his graduation from the University of Pennsylvania. Though he would go on to graduate magna cum laude, he was in a dark place. I said, “Imagine a time two weeks from now when you’re back home and can relax, recharge and rethink.”
That’s when it hit me, and not for the first time: My advice was best directed at me. I needed a break from the stock market drama of the past three months. As of this writing, I’ve gone two weeks without checking my portfolio or even looking at where the market closed. Along the way, here are five things I’ve learned:
1. In obsessing over the market, my main motivations had been ego, greed, anxiety and a hunger for instant gratification. It’s not like I’m ever going to make a name for myself as an investor. Yes, I have an obligation to invest shrewdly, but that doesn’t mean I should vainly devote my life to it.
Shortly before taking my sabbatical, I (for the umpteenth time) toted up the value added from all my efforts to buy the March dip and then later reposition my portfolio, taking profits in some cases. All that stress—Is this the bottom? Is it a dead-cat bounce?—and countless hours of analyzing investment options had added less than one percentage point to my portfolio’s value.
Don’t want to tie your identity to your investment results? Trust me, it’s a lot easier to separate the two when you stop counting your money every day.
2. If you let it, the market will drive you nuts. Investing will fill all the time you’re willing to give it, and yet it can also be done—and often done better—with relatively little effort.
Through Yahoo Finance, I track a portfolio of the exchange-traded funds (ETFs) I own, as well as many that I don’t. My conceit: By following corporate bonds, real estate investment trusts, Treasurys, emerging and developed foreign market stocks, and so on, I can be ready to pounce on the best opportunities.
How far are corporate bond ETFs from their 52-week highs? Is now the time for a little more credit risk?
Throughout the day, I was scanning my list of two dozen ticker symbols, sometimes more than once per hour. But you know what? Opportunities to adjust exposure to different asset classes based on performance cycles or valuations unfold not over days, but years. If you see yourself as an opportunistic investor and want to play such cycles with modest allocation adjustments, you probably don’t need to check more often than once every three months.
3. Ignoring the market reinforces buy-and-hold discipline and reduces the temptation to second guess yourself. If you aren’t a trader—and none of us should be—you have no need for constant updates on things like whether the developed foreign market small-cap ETF you just bought is outperforming the emerging market small-cap ETF you sold to buy it. How about you give it a look in six months?
4. It’s easier to multitask when you have one less task to worry about. Many of us are working from home. But that means we’re often juggling several work projects at any given time, along with responsibilities to children and parents and friends and pets and communities. Constantly checking the market left me feeling like I was barely touching the surface of the rest of my life.
5. Eventually, you find more productive uses for your time. After a few days, the awkward moments when you’re holding your cell phone, wishing you could check the market, begin to pass. There are essays on current events to read, friends and family to chat with, projects to do, walks to take.
No, during my market sabbatical, I haven’t written War and Peace. I couldn’t even finish reading it. But hey, I wrote what you just finished reading. And look at that—the sun is out.
William Ehart is a journalist in the Washington, D.C., area. Bill’s previous articles include In and Out, April Fool and Different This Time. In his spare time, he enjoys writing for beginning and intermediate investors on why they should invest and how simple it can be, despite all the financial noise. Follow Bill on Twitter @BillEhart.
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Agreed. Tracking the market too closely is detrimental to long-term investor. It has the same effect on many people, including me, as being in a crowd when people start toward the exit; I feel like I should be moving, too. I’ve been carefully ignoring my investment portfolio to avoid temptation.