Thursday, October 22, 2009

Are You an Up Day Addict?

I have noticed something interesting about myself: I am more likely to go into Quicken and check the state of our finances on days on which the stock market does well. I am an up day addict. It's not that I make investment decisions or change our financial strategy based on the vagaries of the market, but I am just loathe to look at the paper losses that accumulate on days in which the market goes down.

During the height of the financial meltdown, I kept myself away from Quicken for days at a time. I would check stock quotes online semi-obsessively, but I would not go into Quicken to tally up the damages. Since the market started heading back north in March, I have been turning to Quicken more often, taking pleasure from the fact that the losses were diminishing at a breath-taking pace.

You could look at this in two ways, one good, the other not so flattering. You could say that I am reducing my level of anxiety by not checking the Quicken tally on down days, and thereby lessening the risk of impulsive action that would hurt us in the long term. You could also say that I am too squeamish to face reality. I suppose you would be right in both cases. Nevertheless, at the end of the day, what counts are the real steps that I take (or not take) in response to the data which Quicken so graciously gathers for me, and on that front I am proud to say that squeamish or not, I was able to stick to my plan so far.

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1 comment:

Rob Bennett said...

on that front I am proud to say that squeamish or not, I was able to stick to my plan so far.

I mean no personal offense, Shadox. But I don't share your assessment re this matter.

People don't hold only one viewpoint at a time. We are all always involved in a process of changing our viewpoints. We apply filters that block out certain information bits that we cannot handle at the moment. But those information bits cause doubts to grow over time. At some point, there are enough doubts that we abandon the old thinking and move to the acceptance of new ideas.

I see you as being in the process of abandoning your old belief in Buy-and-Hold. You are uneasy about losses because losses confirm the doubts that have been growing in your mind for years now. It will take further losses for you to be willing to sell your stocks. But the early stages of the process of changing your views have already taken place.

Is your current "plan" the one you believed in years ago, when you adopted a buy-and-hold stance? Or is your current "plan" the reformulated one incubating in your consciousness today? You are indeed sticking to the old plan for the time being but at the cost of ignoring the inner voice pointing out to you the dangers of doing so.

My view is that the inner voice is the one you should be listening to. You are uneasy for a good reason. There is a sense it which it could be said that your old plan failed on the day you began to feel unease about it. A plan that does not inspire confidence is a plan that will not work out in the long run, in my assessment.

Rob