Reviewing your Portfolio too often is not good for you – or your portfolio

March 15, 2017

I just finished reading Richard Thaler’s book called “Misbehaving”  which reviews the history and studies done on Behaviourial Economics – how human behaviour (regarding financial decisions) effects the economy.  Richard coined a phrase called “myopic loss aversion”  which suggests the more we look at our portfolio, the more we are likely to focus on the losses (due to the constant but temporary volatility) the more we see losses, the more we experience loss aversion and the greater the chance we’ll do something typically not best for our long term success.  If you are looking at your portfolio more than once a quarter and finding you get upset at what you see, I recommend you read this article from Ben Carlson.