— The Financial World According to Inya Column,
by Inya Ivkovic, MA
It took me months to convince my husband to stop looking at his portfolio every five minutes. All he would ever do is calculate how much his portfolio was down and think about what he should have done when his stocks were peaking. I have seen investors wallowing in regret before, but he was something else. And, of course, it was all my fault for not being clairvoyant soon enough to predict things would turn out the way they did.
Not that I am that much better at dealing with stress, but I do have my ways of coping. I suppose women have a way of prioritizing stress better. And here are some of my stress-reducing tips I’d like to share with our PROFIT CONFIDENTIAL readers.
I think I’ve just about turned blue telling my husband to stop looking at stock prices every two minutes. Of course, I advise due diligence and being watchful over your investments. But when there are factors outside your control, you can either accept them (probably the only thing you can do) or ignore them (I wouldn’t recommend it), but you cannot influence them. I suppose this is my own version of a serenity prayer when it comes to stock markets.
I told my husband that watching his portfolio like a hawk produces about the same result as when he watches his favorite tennis player, Novak Djokovic. Actually, he cannot watch a tennis match in which Djokovic is playing, at least not calmly and sitting down. Incidentally, the moment he checks the sports channel, Djokovic loses a game or a set point. And when that happens, my husband puts on his road-rage face, starts yelling at the opponent, (as if that’s going to improve Djokovic’s game or jinx his opponent), and goes on about flipping channels for about 10, 15 seconds. That’s how long it usually takes him to go back to Djokovic and, lo and behold, when he does, Djokovic almost by default loses another game point.
Furthermore, frequent trading has a similar unfavorable impact on your investing stress levels to the checking of one’s portfolio every two minutes. Plus, trading too much can actually hurt your portfolio more than just watching it slide in value all on its own. If the transaction costs don’t drive you insane, your emotional impatience to get stocks at bear rally peaks and to sell the moment things go south again will make you mental, as my son likes to put it. Truly, at times like these, the old mantra buying and holding quality stocks that generate steady earnings and dividends sounds like the best plan I’ve heard in a while.
As in life, finding the balance that is right for you is perhaps the best advice anyone can give when it comes to investing when it comes to investing. First, ask yourself how much risk you can honestly endure, determine what your short-term and long-term objectives are, and then structure your investments accordingly.
If you are younger and have time for your strategies for investment to play themselves out, you can perhaps afford to be an aggressive investor. If you are nearing retirement or feel you haven’t accumulated enough, then it might be time to be conservative. The mix of asset classes has to be right for you and you have to stick by it. Take second-guessing your decisions and your emotions out of the equation, rebalance your portfolio only from time to time and only to keep your goals in check, and stop stressing about which direction the market is going to take. This is not a tennis match and you’re not playing against a tennis pro.