I'm obsessively checking my stocks..
Is this healthy? And if I'm happy now- will a pullback crush me?
I’m not going to lie. The post-election rally in the stock market is putting a big smile on my face.
I worry it is becoming a problem.
I talk a big game about the power of investing with a long timeline - and to be clear no actual trading has happened nor do I have any plans to actually DO anything regarding my investments based on the post-election rally.
But it just makes me so happy when I check my investments and the numbers are higher. It’s probably some kind of dopamine hit-right?
As I write this the market just closed with the Nasdaq and S&P at record highs. Yeah!
Recently one of my new friends here in Florida whispered something to me when we were talking about tennis and how it was so fun.
“Bobbi- it’s not like I don’t enjoy playing either way but it really is so much more fun when you win.”
She speaks the truth. Investing is sooooo much more fun when things are going our way.
Let’s be honest: just about everything is more fun when we are #winning.
But as much as we like to feel we had a role in some of life’s “wins” the truth is so much of what happens to us, and our money, is out of our control. My one vote- especially in the state of Florida, did not impact the election and certainly did not impact stocks. I did nothing to move the market higher, and yet I am feeling quite proud of myself.
I must be a “smart” investor.
This got me thinking about how we often take credit for our successes and not so much for our failures. Psychologists call this the self-serving bias. It’s our tendency to attribute positive events to our own character but attribute negative events to external factors. For instance, if our investments do well, we pat ourselves on the back for being savvy investors. But if the market takes a downturn, we blame the economy, geopolitical events, or even bad luck.
Studies back this up. Research from the Journal of Applied Social Psychology found that people are more likely to attribute their successes to internal factors (like skill and effort) and their failures to external factors (like luck and task difficulty).
Another study in the Personality and Social Psychology Bulletin showed that this bias is a common way for people to maintain their self-esteem.
Some healthy investing tips to keep perspective:
Focus on what you can control.
Educate yourself and make informed decisions. No one cares more about your investments than you do. Get all the information possible to make the best choices you can.
Keep your emotions in check and don’t make impulsive decisions.
Understand what you don’t understand and in some cases outsource investment choices to professionals (but stay informed!)
Keep your expenses low. Understand the cost of those experts and make sure you factor that into your returns.
Embrace patience.
Review and adjust your goals. Things change. Course correct as needed.
Enjoy the wins, learn from the losses, and keep a long-term perspective.
The true mark of a smart investor is not just how they handle success, but how they navigate through challenges.
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