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.