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Ignore the Score

John Lim, 2:38 am ET

I NEED TO CONFESS: I’m obsessed with the financial markets. Most weekdays, I check up on U.S. stocks, emerging markets, the EAFE (Europe, Australasia and Far East) index, the 10-year Treasury yield, gold and even the U.S. dollar index, or DXY, as it’s known. Then, at the end of most days, I view my updated portfolio online.

I don’t know why I do this. Deep down, I know it’s irrational. At university, I was an electrical engineering major, studying signal processing. This subfield of electrical engineering focuses on the analysis of signals in things like sounds and images. One thing I learned was that all signals contain both information and noise. Electrical engineers work hard to design filters that eliminate noise while preserving the information in a signal.

What does this have to do with my financial obsession? Day-to-day fluctuations in markets clearly represent noise. Whether the stock market closes up or down on a given day is mostly a coin toss. There’s little to be gleaned from following the financial markets’ daily gyrations.

From my study of behavioral finance, I also know that humans have an asymmetric emotional reaction to gains and losses. Losses leave us sadder and more fearful than gains produce joy and optimism. The net effect of being a close market observer? Undue pain and stress.

Still, I’ve always prided myself on taking market volatility in stride. I have a natural proclivity to go against the herd. When the stock market crashed, I would be in there buying. When it soared, I would raise cash. It made sense, then, to stay on top of markets—or so I told myself.

What I’ve come to realize is that my obsession is not just unhealthy, but a symptom of a larger malady. The essence of my addiction is a deep-seated fear that I won’t have enough. That the well may run dry. This sort of “stinking thinking” has led me to move the goal posts every time I reach them. In short, I’ve fallen prey to a scarcity mindset that’s as irrational as it is unhealthy.

It’s not my intent to make this a post about religion. But as a Christian, I’ve come to realize that my obsession is incongruent with the faith in my provider that I profess on a daily basis.

What does this all mean? I’ve decided to quit my addiction—to go cold turkey. No longer will I check the markets on a daily or even weekly basis. The next time I’ll check the state of the markets and my portfolio will be on New Year’s Day. And after that, maybe quarterly or even biannually.

I’m sure it won’t be easy. Dropping an addiction never is. But writing about it here on HumbleDollar is a commitment strategy that may help. Do you identify with my addiction? I encourage you to join me.

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John Goodell
John Goodell
14 days ago

Phenomenal piece!

Rodger
Rodger
14 days ago

Dems said you should sell everything and give it all the the poor.

Jackie
Jackie
14 days ago

It sounds like hell. Best of luck in kicking the addiction.

Maybe a thought exercise about what you really need to be happy would help.

Deep down I know that I really want to leave some money to my daughter. After that, good friends, some good books (free from the library) and a nice east-facing deck off the kitchen would get me 95% there. The rest is icing on the cake, and I will be okay without it (exotic travel, clothes, fancy meals…) what do you really want?

LJD
LJD
14 days ago

I read this, turned to my husband, and asked, “Is this you writing under a pen name?” I wish you all the best. I hope you are successful and that it brings you peace.

Langston Holland
Langston Holland
14 days ago

Electrical engineering, physician, runner, classical music, intelligent investor, one of my favorite writers, Christian. Wow. : )

johntlim
johntlim
14 days ago

Thank you, Langston. You are always very kind and thoughtful with your comments.

Rick Connor
Rick Connor
14 days ago

My first exposure to this type of behavior came at the beginning of my career. In the early 80s I worked for GE Aerospace. Every day at lunch, one of the most senior OG engineers would check the Dow. He would then walk the long aisle of OG engineering managers and provide that day’s market movement. My cubicle was on that aisle, so I got the same info. Most of the managers were close to retirement, and had much of their savings in GE stock.

Forty years later and Smart phones have made it too easy check the market multiple times each day. In my case, it feels like watching the market is an act of protection, like keeping my eye on my grandsons. As long as I can see them nothing bad can happen. If I keep my eye on the market nothing bad will happen, or I’ll at least identify it early and get out in time. The fact that I’ve never done this in my entire life, nor plan to, has nothing to do with it.

johntlim
johntlim
14 days ago
Reply to  Rick Connor

So true, Rick. We somehow feel that by watching our investments closely we are protecting them from harm. I think it’s just the opposite, however.

Mr Moderate
Mr Moderate
14 days ago

But what do I do about that dopamine rush I get when the market’s going my way?! That trader’s high?!

R Quinn
R Quinn
14 days ago

I wrote on the same topic back on September 4, but I haven’t the fortitude to go cold turkey, although in the last week or so I wish I had.

My funds are now below a magical goal I have in my head.

I think there is more going on than we think though. Your fear is you won’t have enough money, you will run out.

But I don’t count on that money, I don’t use it for retirement. It is, I think, some warped measure of success over fifty years working that I don’t want to see decline.

My annual dividends and interest are greater than the savings my parents accumulated during entire their lifetimes.

My fear is I won’t be able to fulfill a promise I made to myself to leave a substantial gift to my children.

johntlim
johntlim
14 days ago
Reply to  R Quinn

by the way, here is Richard’s piece: https://humbledollar.com/2021/09/cant-stop-looking/

johntlim
johntlim
14 days ago
Reply to  R Quinn

Just read your wonderful piece, Richard. I’m glad I’m not the only one with this affliction. The “information age” is wonderful. It puts more information at our fingertips than most academics and hedge fund managers had thirty years ago. But it is both a blessing and a curse.

I don’t plan to stop reading financial media and blogs. But updating my portfolio’s value each day is just silly in my view and probably even harmful. Let’s support each other and get over this affliction together.
-John

R Quinn
R Quinn
14 days ago
Reply to  johntlim

As long as I have my Bloomberg app and it’s got my watchlist, I’m trapped. Not to mention the Fidelity app to my 401k. I guess it’s not too bad as long as we just look and don’t make panic trades.

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