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Don’t check your stocks every day

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Don’t be a moron. If you check your stocks every day and worry about the daily variations in your net worth, you’re being dumb.

Now, if you enjoy reading Smart Money and Forbes and watching chairs being thrown on CNBC, then by all means–go for it as a hobby. But remember, their “secret stock ideas” are designed to sell copies. And the pundits? Their stock picks are usually no better than chance.

Most long-term investors don’t need to check on their investments every day. The daily changes in stocks are almost always noise, plain and simple, and few 30-year returns were determined by the news of one day. In fact, I read a quote from the president of ETrade saying how, a few years ago, almost half his customers logged in once a day to check their stocks. “That’s crazy,” he basically said, noting that most people don’t need anywhere near that level of activity. (If you can find this quote, please let me know.)

As with most things, it’s not about being sexy, it’s about doing enough to get where you want to go. Wow, you have 450 personal-finance magazine subscriptions! You must really know what you’re talking about!! The same goes for blogs. Do you seriously think that the person reading like 50 personal-finance blogs is actually doing anything?

Give me a break and keep it simple: You need to build up a good infrastructure so you know what kind of asset allocation you want (stocks, funds, real estate, whatever), and then make sure you’re roughly on target. You need to occasionally monitor your investments to see how they’re doing. And you may want to set up automatic alerts through your broker/Google news to keep you informed on major news in the company. How often should you manually check on things? Probably every few months, with a major review every year. But not every day.

Relax. Once you get set up right, investing is easier than you think. Last month, I spend a few hours a month looking after my investments. That’s less time than I spent watching Law & Order reruns yesterday.

To post this image on your blog, MySpace, etc:

See Part 1, Part 2, Part 3, and Part 4 of this series.

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17 Comments on "Don’t check your stocks every day"

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Jim McDermott
9 years 11 months ago

The key to this is as you said, set up news alerts to keep an eye on the business and the sector. Flying blind is as nerve-wracking as watching a live ticker. You at least need to keep on top of the goings on so you’re not bit by another Enron or Tyco.

Moron John
Moron John
9 years 11 months ago
I’m a mid-term trader. While I have protective stops in place (and haven’t lost “a lot” in a long while, vs. recent losses you described that way), I check stocks for price movement. It’s not worry. And calling price and volume activity “noise” is a little crazy. Sometimes you get clear indications that stocks are breaking down. Wanna take the loss so you can watch more t.v.? I read 50 investment-oriented blogs. Today I put $20,000 into a CD at 5.31%. Yesterday I sold JNJ, crystalizing a $150 gain *based on what I saw in daily activity*. I earn $12/day… Read more »
rita_wang
rita_wang
9 years 11 months ago

Anyway,it is a new way in investment. Maybe it is useful to someones who are always busy with their own work.:)

ken
9 years 11 months ago

I think what you said is exactly meaningful to me.
I am not very patient and I sometimes are eager to know the results,which sometimes get me into trouble.
I should learn a lesson from this.

Tark
Tark
9 years 11 months ago

Actually, I seem to remember someone telling me that missing the big days can have a huge impact 😉 http://www.iwillteachyoutoberich.com/archives/2006/08/stocks_are_down_what_to_do.html

Hawk
Hawk
9 years 11 months ago

I think that checking stocks continually is driven by whatever motivates people to check their RSS feeds, email, phone messages, etc. If it’s possible for something to happen, then it’s theoretically worth seeing if something happened.

It’s not realistically worth it. I went on vacation for a week and just the thought of coming back to all the things I usually keep tabs on made me anxious.

Jack W.
Jack W.
9 years 11 months ago
Tark, I think you missed the point of the article you referenced. Ramit was advocating that we not dump stocks simply because they show a decline, even a large one. Part of the reasoning behind this was that if you simply dump your stocks when they’re low, chances are you will miss some of the biggest increase days. The article points out that over a 10 year period, missing out on the 5 biggest days would have reduced your return by 22.65%. Monitoring your stock portfolio balances every day isn’t going to help you spot the “big days”. So, I… Read more »
Buddha52
Buddha52
9 years 11 months ago

This may have been covered before…. But besides IWTYTBR, what blogs are people reading?

Brian Carr
9 years 11 months ago

This is great advice. I used to be someone who checked my stocks on an almost hourly basis – and it made me a worse investor. Now, I trust my research and my gut and stick with my trades. Obviously, if something unexpected happens, you have to react, but other than that, you should be in it for the long term.

Ken L.
Ken L.
9 years 11 months ago

I do watch my investments nearly daily. But I don’t get freaked out by what they are or are not doing on a daily basis. I review my portfolio quarterly and don’t make changes more frequent than that. I may not even make changes on a quarterly basis. But I find it interesting to watch on a near daily basis. It doesn’t bother me or make me anxious.

Are you saying that it is wrong to watch it daily or that it is only wrong to take action based on daily observations?

John
9 years 11 months ago
I probably check my stocks twice a day – not because I am always on the verge of buying or selling something, but just because I enjoy saying “ooh, I’m rich!” or “sh*t, I’m poor!” to my laptop. My laptop likes the extra conversation, too. But seriously, it’s not that bad to just stay on top of your stocks. The whole process takes me maybe 30 seconds a day – I just click on my bookmarked Yahoo! Finance profile and see what’s out there. Plus if you have a portfolio with Yahoo! they automatically ferret out financial news articles that… Read more »
Allan Drake
Allan Drake
9 years 10 months ago

You know why he said that the users that check their stocks everyday on their system are crazy? Because he makes more money money from inactivity fees. He wants them to forget and get charged 40 dollars every quarter.

shriki
shriki
9 years 9 months ago

I’m 16 and want to know when is the best time to buy and sell stocks? It’s kind of a smart gamble but I hear that a lot of the people who stick to a company, make wise decisions, and are patience, tend to get the most out of the stock market.

matt
9 years 19 days ago
Just go with companies you think will do well and stick with them and build up over time, the HUGE players in this game are rock solid stable throughout the most insane economic insanity. Fear is what screws so many of us over. That being said if you see a stock that just sucks, don’t be scared to just sell. Don’t try wasting time saving a stock that’s going down the tubes by compensating your cash and buying more. Decide in advance how much you’re willing to lose and go with that. If its a small amount and your just… Read more »
Stocks to buy today
8 months 28 days ago

The best part about trading groups is that the members goals are aligned with the goals of the website.Free stock pick websites align their goals with the insiders of the stocks

Jimmi Belle
Jimmi Belle
2 months 10 days ago

Your blogs are always gives me useful information but don’t you think intraday trading is beneficial . I took the intraday trading tips and had a good result with intraday trading at Multi Management and Future Solutions.

Bhuboy Villanueva
1 month 2 days ago

Thanks for this, really found thus useful and I share and link to it in my latest post at http://www.sulitditoph.com/stock-portfolio/ , so others can know about it to.

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