FREE NEWSLETTER
Go to main Forum page »
When the market is down, I purposely avoid looking at my retirement account. Over the past couple of weeks, my perception was that my balance was likely lower than it had been in years.
Today I logged in to take a look. Because I can view the history of my account, I was able to see that the value it sits at today is still higher (by a fair amount) than it was just a year ago. And yet my perception was that it would be far, far less than that.
I don’t know if it’s the generally pessimistic outlook I hold in my life that creates this illusion or not.
Kristine, that is a very perceptive perception.
I wasn’t going to check, but after reading this I took a look. According to Vanguard the one year performance of my 50-50 portfolio is 6.5%. While that’s down from what it was, it’s not anything to get excited about. The accompanying chart, ending in a cliff, however….
I’ve come to look at these market corrections as “stress tests” for investing. In real time, if you feel an overpowering urge to mass-sell your stock holdings at this point, your stock allocation is probably too heavy; if you feel an overpowering urge to mass buying, your stock allocation may be too light. If you just shrug your shoulders and say “meh”, or maybe want to tweak a little around the edges, then your stock/bond allocation is probably about right.
Experience is a great teacher…and a way to learn things that theory taught in the classroom can’t seem to match.
You’re experiencing a known human phenomenon! Large majority of people experience losses far more harshly than they experience equivalent gains.
SO you’ve been inundated with info about losses from the very recent all time highs in Feb (that cause you to experience strong emotions) and little info about how in context of the recent bull market it’s not that big of an event.
Even when we know it’s happening, it’s hard to resist.
Thank you for this thoughtful comment–it’s so true!
Just today I’ve seen a few articles say a market correction was quite possible (even overdue) in 2025. The tariff situation may have just been the trigger to start it. But, of course, any number of other unpredictable events could have started a correction as well. Or maybe such a correction wouldn’t have happened for another five years. We’ll really never know.
In addition to checking the total balance in my Vanguard holdings I can also look at my total returns. I think this is a more accurate barometer as I have withdrawn a fair amount of funds to purchase two new vehicles in the past five years. When I look at the figures my total returns are back to where they were in June of last year which was an all time high, so pretty good considering what has gone on so far this year in the markets.
I do something similar with net worth.
Just remember you want it to keep dropping if you are still working, and to go up if you are retired/relying on that money for income.
At this point I’m not contributing to–or drawing down from–my account. So for the next couple of years, it doesn’t make too much of a difference to me what the market does. That said, I certainly prefer to see my account balances grow rather than decline.
In today’s climate you may be referred to as an optimist.
That’s the nicest thing anyone has ever said to me!
So, are you feeling a little optimistic now? Just kidding. I recall Buffett once wrote something like “if you made it through the week without checking on the market, try doing it for a year”. I admit I check often, because it is so easy to do. The key thing of course, especially during tumultuous times like these, is not whether you look often or hardly at all, but whether you feel an urge to do something based on emotion, and can resist it. As Bogle said, “stay the course”. I don’t recall him saying that it is easy, but it is wise. It seems to me you are in a relatively safe position, and can ride out whatever comes next.
I wouldn’t say I feel optimistic, but at least I don’t feel quite as pessimistic as I did prior to peeking at my balance :-). It’s funny because I have conditioned myself to only look at my account balance if I know it’s increased. So when the stock market hits some new ‘high’, I’ll look. But if the market falls for the following three days, I won’t look. I won’t look again until I know the value will be higher. I am glad I looked today because it wasn’t nearly as bad as I had imagined. Not great by any means, but not terrible.
I used to do like you, Kristine, in checking account balances. But I am wary of online security, and of the customer protection policies of the financial services corporations managing my accounts. All specify the “prompt” or “timely” checking of balances, messages, and documents in their protection guarantees. Without better definition of these terms, I now feel compelled to login at least every few days and to read and/or click through all new messages.
I’ve noticed one odd anomaly with my financial services provider. When I’ve used their online ‘benefit estimator’ to see what my future benefits might be, I get some strange results. I really don’t trust their estimates at this point.