Investment Apps have made it extremely easy to track the performance of your portfolio, on a real time basis. The lines between traders and investors have started to blur, mainly because of how easy it has become to be involved in the markets.
Picture this scenario – you have bought a scrip with a long-term horizon in mind. You believe in the growth story of the company, and their management has a good track record from the past. However, the market corrects over the next few weeks and you’re down 7% on the stock. You panic and sell.
Sounds familiar, doesn’t it?
What you just witnessed was a concept called “Myopic Loss”, a phenomenon which makes you look at the short-term loss in a state of panic and forget the original thought behind the investment. Looking at your portfolio frequently can make you feel like it is performing worse than it actually is, and drastically affect your chances for long term success.
A study conducted by Franklin Templeton on the S&P 500 Index showed a direct correlation between losses incurred and frequency of checking one’s portfolio. The losses reduced from 46% when checked daily to 20% when checked at annual intervals. The lesson they tried to teach from this exercise was to tune out the noise and spend time on identifying the right opportunities.
How often do you check your portfolio? Let me know below