• Brett Schafer

How Often Should you Look at Your Investment Portfolio?

I don’t think there’s a “right” answer to this question. Or, at least, there are multiple right answers depending on the situation. It all depends on how much time you, the investor, want to spend managing your investments, and whether you have the temperament to see your stocks change in value every day (which they are guaranteed to do).

If that answer, “it depends,” leaves you confused or unsatisfied, that’s how you’re supposed to feel. Investing is not a math problem. There is no way to “solve” the market like a quadratic equation unless you’re Jim Simons. And you are definitely not Jim Simons.

So, what is an investor to do? Check their portfolio once a week? Every day? As little as possible? Does it even matter?

Since this is such a hard question, let’s apply the age-old Munger axiom, “invert, always invert,” and flip the problem on its head.

How not to Check Your Portfolio

It was three years ago. I had just gotten $2,500 as a gift from a relative and wanted to put it to work in the stock market. After googling “stocks to buy for the coming infrastructure bill” (genius strategy, I know), I bought five tickers and was ready to watch them soar.

At this point, I knew nothing about the fundamentals of investing. I couldn’t tell you one relevant metric of any of the companies in my portfolio, or why I owned them in the first place. All I knew was some random Marketwatch article said these were stocks to own for the next year, so they were guaranteed to succeed.

The next day, I woke up at 7 or 8 (I live on the West Coast), rolled over in bed, and checked my Schwab account to see how my portfolio was doing. To my ignorant delight, I was ecstatic to see my picks up $16 an hour into the trading day. But then, tragedy struck. Refreshing my page, I saw the value of my portfolio plummet to being down $5. Panicking, I thought, “what is going on? Something must have happened to cause my stocks to drop in value.” What I didn’t realize is that these price movements happen every day. It’s called volatility and is a feature of the market, not a bug.

During my first year of investing, without fail, I checked my Schwab account every hour of the trading day. I remember getting out of class and immediately logging in to see how my “infrastructure plays” were doing (as you can imagine, they did quite poorly). This was not healthy investor behavior.

After some trial and error, plenty of podcasts, talking to some mentors, and some wonderful investing books, I learned how futile it was to check my stocks every hour of every day. It makes investing way more stressful than it needs to be.

I write this because I know some of you act the same way. It’s instinctual to check-up on your retirement account because it is so meaningful to your future and anyone dependent on it.

Now, I look at my portfolio once a day, and hopefully less outside of an earnings season. I have notifications set-up to alert me if any stock I own goes up or down 5%, but other than that I try to keep all outside news, noise, and the like away from my tempting eyes.

This anecdote exemplifies the one sin an investor can make when checking their portfolio: overdoing it. 99% of the news and 99% of the price movements of the stocks you own (or even ETFs, for that matter) are meaningless. The more you can keep yourself away from that noise, and away from the temptation to make devastating decisions to your portfolio, the better.

Okay, that was a little long-winded. Let’s get back to the actual question, which is how often someone should look at their portfolio. I divided it into two categories for the two distinct classes of individual investors. First is someone that owns individual stocks.

Watchful, but Not Paranoid

If you invest in common stocks, it is for one reason and one reason only: you believe they will beat the indexes. If you don’t believe that, you should immediately sell those shares and put the money in an index fund.

Unlike broad market ETFs or a diversified 60/40 portfolio, common stocks need to be managed. Earnings letters, 10-Qs, and conference calls should be analyzed every quarter as a check-up on your investment thesis. After that, any relevant news releases, presentations, and product launches should be read so you can keep up with how the business is doing. This does not include reading every “Stocks Jumped Because of [Insert Irrelevant Event]” headline. Stick to investor relations pages and actual news surrounding a business.

But don’t be a helicopter parent. Like I referenced above, it can be detrimental not only to your returns but your stress levels to constantly be checking the performance of your stocks.

If this sounds like a lot of work, trust your instincts. Managing a portfolio of 20 stocks the right way takes time. But what if you’d rather just track the market (or get darn close to it)? Then index funds and ETFs are probably for you.

Set it and Forget It

*I’m assuming if you’re reading this you know what ETFs and index funds are, but if not, learn about them here.

The point of owning an index fund or shares of an ETF is to make life easier for you, the investor. Whether it is a 60/40 portfolio, 20% international or emerging markets, or just a simple S&P 500 index fund, most of the work is done for you. Just make sure the allocation is where you want it and boom, your portfolio is ready to go on autopilot for as long as you want.

My Roth IRA is all broad market ETFs that I plan to hold forever. The only time I even log in is to set-up periodic transfers from my bank account. I purposefully try to not look at the returns of my holdings. Why? Because month-to-month returns have no bearing on the long-term success of the account.

I suggest you do the same for any passive investments you plan to hold for 10+ years. Save yourself time and unnecessary stress that might make you alter your portfolio for the worse. Just set it and forget it and check back in thirty years from now when you’re ready to retire.

Obviously, there are some gray areas here. Everyone’s portfolio is different, but I think these two scenarios are applicable to a lot of investors. If you own individual stocks, that’s great, but you’re going to have to spend some time managing your portfolio. If you only own passive investments, that’s great too, but you’re probably looking at your portfolio too much.

And always remember, never be a helicopter parent on your investment account.

Disclosure: The author is not a financial advisor, and may have an interest in the companies discussed.

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