By Zach Scheidt
This post “Set It And Forget It” Is Also The Key To Investing… appeared first on Daily Reckoning.
I’ve got a personal question to ask you today…
How much time do you spend checking the prices in your investment account?
Do you review your account on a monthly or weekly basis?
Do you login each day and check your account balance?
Do you keep a screen open on your desktop so you can see the ups and down throughout the day?
Or maybe you check stock quotes throughout the day, and have alerts sent to your phone any time a stock moves higher or lower by a set amount.
Now, let me ask you a second question…
Is all of that information really helping you? Are you making good decisions based on the day-to-day fluctuations in stock prices?
It’s an important issue worth thinking about…
Addicted to Worthless Information
Back when I was managing money for my hedge fund clients, I had a major addiction to minute-by-minute stock prices. And I had no idea how damaging that addiction was!
Since I was managing millions for our clients — and since my annual bonus was tied directly to the amount of profit I generated for these customers — I decided to build a comprehensive spreadsheet.
This excel spreadsheet automatically pulled in live quotes from our charting platform. It calculated the live value of each of our customers’ accounts. And based on that calculation, the spreadsheet computed what my annual bonus would be… down to the last penny!
Early in my career, I used to sit and watch this bonus bounce up and down, and think about what I could afford for my family based on what the number said.
Think about how absurd that was!
It could have been midway through March. And my bonus wouldn’t be determined until all of the calculations were completed from the full year of trading (ending December 31st). But I would still be wasting time watching my net worth (on paper) bouncing up and down.
I think I realized how big of a problem this was when I took my mom to lunch for her birthday.
After spending 90 minutes celebrating my mom, I went back to my desk to find that the market had pulled back. The accounts that I managed were off by about 0.5%. On roughly $20 million in assets managed, that netted out to a $100,000 pullback. And since I was entitled to 10% of whatever I made for my clients, the bonus number on my spreadsheet declined by $10,000.
I remember instinctively thinking: “Was that lunch with my mom really worth $10,000??”
What a horrible way for a son to think!
And it’s not like if I had been at my desk during the lunch period, that I would have made any decisions that would have avoided the $10,000 pullback in my theoretical bonus figure.
This was simply part of the ebb and flow of markets. And I was so focused on minuscule market movements that I was allowing it to affect my life balance. Not to mention …read more
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The post “Set It And Forget It” Is Also The Key To Investing… appeared first on Junior Mining Analyst.