How often do you look at your portfolio? We have clients who look at it every day and others that only check it quarterly. Volatile markets tend to make people a little more nervous about how their investments are performing, and we believe it causes them to look at their investments more often.

As Investment Advisors, it is our job to teach our clients that they do not need to look at it every day. It will drive you crazy to see your nest egg fluctuate as much as we have seen the market move recently. A nice attribute about stocks and bonds is that you know exactly what they are worth at any given time. We all have a tendency toward wanting to know how we are doing with our investments, but it should not be daily. How often do you check the price of your home or your rental properties? We are willing to bet not that often. For many, the home is the largest investment owned, but we do not check or even know what it is worth daily. We have no way of knowing what it is worth until someone makes an offer to buy it at a certain price. Does the drop in your home value cause you to panic or lose sleep? It should not, and neither should market fluctuation for your portfolio. If it does, then you have too much risk on and you need to have a portfolio built with less volatility. Just remember, there is a trade off with risk and return with investing.

Many of our clients come in for meetings and want to know how their portfolio is performing in comparison to the S&P 500. The S&P 500 is the major market index used in comparing performance vs equity portfolios. If your portfolio is not one hundred percent equities or stocks, then comparing your portfolio returns to the S&P 500 is not a fair comparison. A portfolio that has a seventy percent stock to thirty percent fixed income weighting is not going to outperform the S&P 500 in a bull market. It will tend to outperform in down markets and will have less volatility due to the diversification of asset classes.

The fact is that as humans we tend to feel twice the pain when we see our portfolios decline in value than when we see them increase. Investing should not be considered a short-term proposition. We need to look at our investments over the long term and not make rash decisions based on daily market fluctuations. Everyone has a different situation, and we invest each of our clients based on their goals, objectives, and risk tolerance. We tailor portfolios to meet each client’s needs. There is no one size fits all when it comes to investing.