Have you been losing sleep over the stock market?
If there’s any way for you to pay less attention to it, DO IT! The more frequently you look at the stock market and/or your investment accounts, the more likely you are to see losses, and when you see those, your brain spurts out cortisol, the stress hormone. When that happens, the flight/fright part of your brain kicks in. It’s not the thinking part of your brain and doesn’t care about your retirement; it wants relief now.
According to the research firm, Bespoke Investment Group, over the last 30 years, if you had looked at your account every minute, 51.2% of the time, you would have seen a loss. Look at it every four hours, and you would have seen a loss 46.9% of the time. If, however, you had only looked every six months, you would have only seen a negative sign 28.9% of the time. Had you looked at your account an unreasonable once-every-five-years, you would have seen a negative return just 10.9% of the time.
Here is a look at the Standard & Poor’s 500 (S&P 500) over the last 12 months. It’s been choppy and there’s been plenty to worry about.
Here’s the same chart with a 200-day (one-year of trading days) moving average (in orange) overlaid. It shows, at any point, what the S&P 500 has done over the last year. That’s a lot more soothing line and, other than the flattening of it, recently, has little to concern an investor.
Here is the S&P 500 over the last ten years. From end-to-end, it looks good, but there were some jaw-dropping declines along the way—plenty of reasons to sell.
Now, here is the last ten years with a five-year moving average overlaid (in orange.) If you’re tracking it, you might think, like Alfred E. Neuman, from Mad Magazine, “what, me worry?”
As another way to think about this, consider your home. It’s not reappraised every day, week, month or year, and chances are you aren’t fretting about whether it’s more valuable today than it was yesterday or last week. Any price movements only show up when it’s time to put your home on the market. If your home were part of the stock market, it would be like a guy who drives by every day and yells a different price for your home. Would you care?
So do yourself a favor: don’t log on to your account to look at your account’s value today. Instead, spend some time on the Good News Network site or go listen to some birds or download the Seek app and go identify some wildlife.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.