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How to Take the Emotion Out of Investing: Index!
By JLP | May 24, 2006
I’ve written about My Prudent Portfolio in the past. Recently (May 10th, to be exact) the portfolio was up over 17%. Since then, it has all been downhill as you can see from this graphic:
What a difference two weeks makes! This is a perfect example as to why it is best to not look at your portfolio on a daily basis! Why? Because it makes you “want to do something!” There is a positive in that the portfolio is still outpacing the S&P 500 Index (even if you take out a 1.05% management fee). So it isn’t all bad news.
Now, to avoid having to mess with portfolios or look at positions, one thing you can do is simply index rather than pick individual stocks. Yes, you will “give up” the ability to “beat the market.” However, you will gain the freedom of worrying about individual positions unless you just like worrying. In that case, there’s not much you can do except go for the sure thing of losing money to inflation by sticking your money in a bank account.
Topics: Investing |