On the heels of my look-back at the stock market decline of 2008 – 2009, the financial troubles of Greece sent shudders through equity markets today. While I try not to pay too much attention to the emotional swings of “Mr. Market” or his reporters, I read a quote from a trader that I couldn’t help but share:
” ‘We did not know what a stock was worth today, and that is a serious problem,’ said Joe Saluzzi of Themis Trading in New Jersey.”
Understandably, for a guy that trades stocks every day for a living, this is important. But for this to be featured in the ‘front page’ of Yahoo! Finance suggests that it is of paramount importance for average investors and web surfers to know what their stock prices are at every instant of the day.
Well guess what? It’s not!
If you’ve read any of my articles on investing, you know that I believe investing in stocks with a short-run focus is dumb. Stock portfolios should be held for long-term gains and savings goals like college or retirement. Because of this, it is pointless, time-consuming and emotionally draining to worry about the day-to-day changes in stock prices. It can be hard to resist the temptation to check daily on your portfolio (I have the same problem), but we must resist the urge!
Super-investor Warren Buffett has been quoted as saying that a person should choose investments such that they don’t care if the stock market closes for 10 years, rendering them unable to trade or check its market price during this time. As with many of Buffett’s simple statements, there’s a lot of wisdom in this one.
What you should do
Investors should structure their portfolios with the appropriate mix of stocks, bonds, and cash (‘asset allocation‘) and buy highly-diversified, low-fee index funds and plan to hold them up until they need the money (for at least 5 years; the longer the better.)
If you haven’t done this, give your portfolio a checkup and make sure you have an appropriate portfolio given your age and needs. If you’ve done this, then forget about the market’s daily throes and do something more enjoyable with your free time. Turn off CNBC and avoid the financial media’s sensationalist ‘news’ that’s designed solely to make you worry over things you shouldn’t and consume more of such stories. Instead, sleep soundly at night, knowing that you’ve structured your investments such that they require only occasional maintenance and review.
To see if you might benefit from the help of a professional financial advisor, check out my website at greenlakepartners.com.