Is Worrying About Your Portfolio a Hobby?

Is Worrying About Your Portfolio a Hobby?

Here is a short list of article headlines from yesterday’s news:

  • Worried about rising rates?  Here’s why you shouldn’t be.
  • Stocks edge up as N. Korea tensions escalate
  • US Treasurys rise sharply as North Korea fears weigh on sentiment
  • Cardiologist Warns: Throw out your probiotics now
  • Stocks around the world are sliding on ‘the single greatest threat to financial markets’
  • Wall street sets up for sharp losses as North Korea threat returns

Look, I get it.  Most of the above headlines are about North Korea and many fears regarding a potential conflict are justified.  But when it comes to our portfolio, if it wasn’t North Korea, it would just be something else.  We are addicted to worrying about our portfolio.

The evidence is in.  The market has been going up for far longer than you’ve been alive (not continuously or in a straight line though).  It seems that with the apparent exception of the late 90s, there is always a consensus of people that are overconfident that the market is about to tank.

These folks are never held accountable either.  In fact, the higher the market goes, the more coverage they get, and the louder they shout.

It just doesn’t make any sense.  And it seems that in almost any market, anyone that is optimistic about the near future of the market is either ignorant or wearing rose colored glasses.

The pessimists shout at the optimists on your favorite market news channel about the Shiller PE or interest rates or falling profit margins or whatever the data du jour is and it always sounds smart.  That doesn’t make them right though.

These loud voices encourage investors to worry.  If you’re not worrying, then you are somehow missing something.  Never forget that the media is paid by selling advertising and the way to keep people interested is to keep people worried.  Pessimism sells.

This doesn’t mean you should do anything though. Peter Lynch famously stated, “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections than has been lost in corrections themselves.”

If you find yourself constantly worrying about your portfolio, perhaps it’s time to consider meeting with a qualified financial planner.  But if you have faith that you can stand the cacophony of noise, then prepare a personal investment policy statement so you’re prepared for when the markets turn sour.

I’d be perfectly happy if this article marks the market high, because I’m not trying to say that the market will continue to go up or make any market predictions whatsoever.  I’m just saying that so much of what is out there is just noise.  It’s noise trying to convince you that you need to do something.

There are always going to be articulate naysayers out there ready to convince you that you should head for shelter.  Don’t let worrying about your portfolio become a hobby.

Instead, consider turning the market news off and implementing a strategy that accounts for the good and the bad things that could occur.  It is probably much wiser advice to follow.

 

 

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