The market is up! But your portfolio isn’t up as much. Then it’s down! You’ve lost money (but not as much as the market). This is a common experience most investors face. The good news is this usually ends with portfolio outperformance, but that doesn’t make it any less difficult to endure while it is happening. Here are a few tips to help navigate these ups and downs:
- Set it and Forget it. We live in a world of action, but oftentimes the best thing to do as an investor is nothing at all. The market is going to ebb and flow but trying to time these gyrations is a losing game. Often, setting and forgetting has been proven to be the better choice.
- Don’t Chase Returns. There’s always going to be a stock of the week and the media is going to make it seem like you are continuously missing out. However, chasing these stocks could amplify the emotional aspect of investing, and not in a good way. The stocks of the week hardly ever become the stocks of the decade. It’s the long-standing ones that are more important to watch for wealth creation.
- Don’t Watch the News. The media industry has built its business based on the sensational. Emotional reactions are what they are after and they’re very good at triggering them. Your success is going to come through diligence, patience and good nerve. If you watch the financial news you are going to need nerves of steel.
Try to remind yourself that emotions are temporary and shouldn’t guide your financial decision making. Having a diversified portfolio can produce a better outcome in the long run, even if it feels like you are falling behind at times.