Updated: June 1, 2023
Yeah, that’s right. I said it.
Don’t think about your investments.
Once you have created your personal financial plan, and executed it, the best thing you can do is NOT think about it.
Just ignore it completely.
You can’t control what you don’t control.
And I hate to break it to you my friend, but you do not control markets.
Sorry. I know it stinks to hear, but the earth doesn’t revolve around you.
Sure you’ve read all of the financial books from The Simple Path to Wealth by JL Collins to The Psychology of Money by Morgan Housel to The Little Book of Common Sense Investing by Jack Bogle.
You’ve set yourself on the right path by investing and by carefully selecting your asset locations, brokerages, index funds, etc..
And the best thing you can do from this point forward is….
NOTHING.
Absolutely nothing.
That is it.
The ONE thing that you actually can control in investing is whether you buy or sell.
Sticking to your financial plan, is the most important part of your plan
Your job as an investor over the long-term is to avoid selling as much as possible.
And frankly, the more you tinker, the more stressed you will be.
The more stressed you are, the worse your decision-making will be.
The more you overthink things, the worse your portfolio will perform.
The stock market is a device for transferring money from the impatient to the patient.
Warren Buffett
There is literally nothing else that you need to do, but to hold on for the ride of your life.
If you are patient as Warren Buffet has suggested, then you are doing 90% of your job as an investor.
If the stock market is all about patience, then patient we must be.
And yet it isn’t easy.
Pullbacks happen all the time. We just saw one, and we will see one again.
But none of them is ever the end of the world:
The market is volatile. Crashes, pullbacks and corrections are absolutely normal. None of them are the end of the world, and none are even the end of the market’s relentless rise. They are all, each and every one, expected parts of the process.
The Simple Path to Wealth by JL Collins
Or if you don’t believe JL, let’s turn to the great Jack Bogle, who describes the stock market as a giant distraction from the actual business of investing:
The expectations market is about speculation. The real market is about investing. The stock market, then, is a giant distraction to the business of investing.
The Little Book of Common Sense Investing by Jack Bogle
I’m sure I could dig up plenty more quotes here to fit the bill, but you get the point.
JL Collins, Jack Bogle, and Warren Buffett all agree that the stock market is a giant distraction.
So don’t get wrapped up in the day-to-day.
And my advice is that you shouldn’t think about your investments.
Investing is about focusing on ONLY what you can control
Obviously, I don’t want you to completely ignore and forget about your investments. That is not the point here.
The point is about focusing on what you can actually control.
In investing we can control a lot of things:
- The amount we are investing each month
- The size of our emergency fund
- Our asset allocation (here’s mine)
- The type of accounts we have (taxable and tax-deferred)
- Our individual holdings
- When we buy and when we sell
So there is A LOT within our control.
But there is one thing that remains:
We can’t control whether the markets go up or down.
So the best thing we can do is:
- Understand that market corrections happen
- Accept that they happen
- Ignore them when they happen
We can respond fearfully when they are down, or we can be calm and prepared. I advocate for the latter.
To prepare for the worst, I’ve not only visualized a market collapse, but I’ve also baked it into my plan.
I know exactly what I am going to do.
And that is absolutely nothing.
Sure, I still track my net worth every month. I want to keep tabs on my financial health. But I do not tinker. I do not sell. I stick with the plan.
So most days, it is best to ignore your investments. Don’t even think of them.
The result will be that you won’t have the same level of attachment when the market does inevitably crash, and you won’t make any big mistakes.
You will stick to your plan. And that is why it is better to not think about your investments (most days).
No thanking about my investments as one of the reasons why I like to invest in real estate. There is no daily ticker symbol to tell me how much my property is worth. It’s so much easier to hold the property for 10+ years then with stocks.
Now I’m wondering, should I sell some of my Netflix stock? It’s so much easier to do it by just pressing some buttons.
BTW, was JL Collins a professional trader or managed money? In my book, I want to talk about people I don’t necessarily have the background in finance or any other subject who are now viewed as experts and how it happened.
Thx, Sam
JL Collins background is actually in media. He was never an advisor, money manager, banker, or anything like that. I believe he ran magazine and radio business’ back in the day.
Always a great reminder. I wonder if it used to be easier to ignore investments back when you couldn’t track them and transfer money within seconds on a smartphone. We’re so spoiled with instant information and instant gratification. I agree though!
I agree, having your investments riding in the palm of your hands and your everyday emotions is definitely not a good thing for society at large. On one hand, it’s great that more people can be exposed to and test the waters. On the other hand, they are likely to be their own worst enemy.