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During this episode, Larry gives multiple reasons why you shouldn’t check your portfolio daily. There’s a good bit of science surrounding this topic, yet many still misbehave. The research shows that investors are highly risk-averse. Investors feel the pain of a loss twice as much as the feeling you get when a portfolio gains. The larger the dollar amount, the higher that ratio is. On a daily basis, Larry says the stock market goes up or down about 50% in either direction. As you extend the maturity or the length of time, the odds start to favor the market going up. The more days you watch the market the more likely there will be a negative emotional toll. Your much more likely to stay in the joy territory if you don’t check frequently.
Larry offers some good advice and reasons why you may not want to check your portfolio frequently. At Intelligent Investing, we firmly believe in the value of understanding behavioral finance, which is the school of thought that describes how investors actually act. We try to understand how men and women think to minimize the irrational decisions we make from our own emotions and inherent biases.
We’ll be interviewing Larry on several podcasts regarding markets, passive investing, and diversification, so be sure to subscribe to our Intelligent Money Minute podcasts.
Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has since authored seven more books.
Larry Swedroe Bio
Since joining the Buckingham Strategic Wealth in 1996, Chief Research Officer Larry Swedroe has spent his time and energy educating investors on the benefits of evidence-based investing.
In his role as chief research officer and as a member of the firm’s Investment Policy Committee and Board of Directors, Larry regularly reviews the findings published in dozens of peer-reviewed financial journals, evaluates the outcomes and uses the result to inform the firm’s formal investment strategy recommendations.
Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television shows airing on NBC, CNBC, CNN and Bloomberg Personal Finance. Larry is a prolific writer, contributing regularly to multiple outlets, including Advisor Perspectives and ETF.com.
Before joining Buckingham, Larry was vice chairman of Prudential Home Mortgage and senior vice president at Citicorp.
Larry holds an MBA in finance and investment from NYU and a bachelor’s degree in finance from Baruch College.