Stop Looking at Your Portfolio So Frequently

In response to concerns about the Permanent Portfolio having a bit of a down month over at the forum I posted the following:

I have been running this portfolio for almost five years now. I sleep so much better vs. my older index stock/bond portfolio I cannot put it into words. It has taken me through the 2007 real estate bubble, the 2008 real estate crash, the 2009 stock market recovery, the 2010 “double dip” recession (which was a banner year for stocks BTW), and now the 2011 Quantitative Easing Part III and Euro panic. It has done these things with a stability that I never had before I started using it. If I owned another portfolio over all of this I would have given up a long time ago.

I strongly encourage people not to track their portfolio values over days or weeks. If you can stomach not checking but only once a month that is an OK start. If you can check once a quarter that is great. If you can do it once or twice a year that is fabulous. But emotionally most investors just can’t stomach looking at things frequently. There are powerful psychological reasons why this happens. So, I recommend we just accept it and don’t fall victim to them. The best way to do this is to not look at things too often. Simple!

You will go nuts checking portfolio values frequently. If you don’t go nuts because you think you are losing money, then just wait until your neighbors are bragging about their +20% gains some year at the company Christmas Party. That will drive you insane with jealousy if you maintain a short-term attitude (but of course they never brag about the negative years they have, do they?).

I am perfectly happy with my boring and low volatility 9-10% average returns the portfolio has had through the years. This really is a remarkable thing when you look at what other portfolios put their owners through to get the same results. The Permanent Portfolio is still positive year to date where many stock/bond portfolios are probably well into negative territory by now.

The Permanent Portfolio is not a magic elixir that eliminates all short-term losses, but I haven’t found anything that works better so I’m going to stick to the plan. Part of that plan is not checking the portfolio constantly!

6 thoughts on “Stop Looking at Your Portfolio So Frequently

  1. craigr

    I do individual blog posts, but yes I need to update that chart! I am probably going to shift to just use the Simba spreadsheet because it is fairly ubiquitous now. It is not perfect (the LT bond returns it uses are not the right duration). But it is good enough to get the point.

     
  2. jay

    Sure i ownly look monthy,but it makes you wonder why you can’t get advisors to go more then 15% cash…oh right they don’t get paid.

     
  3. Reido

    Don’t forget donuts… Computer, Playstation, Donuts…
    I agree and think its unforunate that BND (vanguard product) is not well representative of the greater bond market.

    I admittedly do look at my portfolio quite frequently… Why? to look at my gains over the year and compare to market losses. This is one of the most satisfying times to be invested in a Permanent portfolio and it’s hard to get too down seeing the market crash and STILL turning a tidy profit for the year.

     
  4. Edmund X White

    i used to look monthly but have been looking yearly for a while now (as well as rebalancing yearly). I got a little worried recently with reports about the stock market so i gave it a mid-year look and it was all still within my percent limits for balancing. just confirmed that i really don’t need to worry about it more than once a year. it’s a nice thing to have off the mind to be honest.

     
  5. craigr

    Edmund,

    The investing force is strong with you. You have the right attitude for success.

    If I wasn’t running this blog I’d be looking a lot less often myself!

     

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