In today’s world of technology, we expect to be constantly in touch with everyone and everything. While we used to be able to leave the house without even thinking about calling anyone, suddenly a phone left at home is reason to turn around and drive a few miles back. While the study has not yet been done, I’m certain that the brain pattern from texting addiction will be similar to those for heroin addictions. How else could you explain people paying to go to a movie and then sitting there, checking texts or teenagers sleeping with their phone on their pillows? Like a meth addict, they’re afraid they might miss something if they fall asleep without their cell phone near.
In the golden days, you could get the closing prices for your stocks in the paper each morning. Then along came CNBC and you could watch the ticker at the bottom of the screen. If you knew your stock symbols (none of this wimpy, full names provided today), you could pick out your stocks as they traded. At the end of the day they would run the closing prices for all of the NYSE. Usually they would go to commercial just when your stock was coming up and then, like the end of the jumps on the Dukes of Hazards, you would miss it because you were out of the room when they came back.
Then came the internet, where you could get 15 minute delayed quotes – almost as good as the broker. Then came real-time quotes. The instant things happened, you knew it. Now we have streaming quotes to your phone. Alerts if your stock crosses through a certain threshold. You would think that we would all be making tons more money, jumping into stocks right at the bottom and then deftly stepping out – just like how Bugs Bunny would step out of the falling elevator at just the right time – before the stock came crashing back to earth.
Except we’re not. When you’re sitting there talking to a friend and an alert comes over your phone that your stock has crossed a limit, suddenly your caught in panic mode. Mr. Market is calling out a price to you – should you take it? If you watch it long enough, can you will it to go the other direction? Is that a head and shoulders pattern, or a cup and handle. It broke the trend line – will it now start a down trend or will it come back and pass the old high? Bad news came out and the stock dropped 20% – should you sell now and lick your wounds, or will it bounce back? Should you double down?
The fact is, for the serious investor, over-trading is the worst thing to do. Constantly watching price movements leads to increased trading. Trades equal brokerage fees (there’s a reason brokerage offer the real-time quotes). Trades equal short-term capital gains. Trades equal missing opportunities – snatching defeat from the jaws of victory. Getting the little gain and missing the lifechanging bananzas
How about unplugging from the market. If you aren’t looking to sell your house, you don’t spend all day calling realtors to find out the current price of your house. If you are buying stocks for the long-term, which is the only way to really make money, you shouldn’t be constantly checking on the price. The price is just that – the price at which the shares traded last, by people who had their own reasons for trading the shares. What you should care about is how the company is doing.
So, how often should you check your stocks? At a maximum, I’d say about once a day, preferably after hours so you can’t freak out and enter a sell order. If you check it once a week, that would be all right too. If you checked it once a month, that would be fine. In fact, if you just read the annual reports and looked at the price range listed there, that would be perfectly fine. More important that the price range is the earnings history. The debt levels. The plans for expansion. The cash flow growth. The dividend growth. Just remember to study your monthly statement to make sure none of the positions have grown too big to fail.
When you are seriously investing, check the prices when you are buying in and look for dips to pick up more shares. Once you are set, until you are ready to sell some of the shares because the position has gotten too big or the company is not performing financially like you expected, forget about the price. If the company performs, price will follow.
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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.