Insights + Resources

Should You Care What the Stock Market Does Each Day?

Feb 10, 2023

Stock Market Quotes Chart
Focusing on Your Strategy During Turbulent Times

Investors are people, and people are often impatient. No one likes to wait in line or wait longer than they have to for something, especially today when so much is just a click or two away.

This impatience also manifests itself in the stock market. When stocks slip, for example, some investors grow uneasy. Their impulse is to sell, get out, and get back in later. If they give in to that impulse, they may effectively pay a price.

Across the 30 years ended December 31, 2021, the Standard & Poor’s 500 posted averaged annual return of 10.0%. During that same period, the average mutual fund stock investor realized a yearly return of just 4.1%. Why the difference? It could partly stem from impatience.

It’s important to remember that past performance does not guarantee future results. The return and principal value of stock prices will fluctuate over time as market conditions change. And shares, when sold, may be worth more or less than their original cost.

 Investors can worry too much. In the long run, an investor who glances at a portfolio once per quarter may end up making more progress toward his or her goals than one who anxiously pores over financial websites each day.

Too many investors make quick, emotional moves when the market dips. Logic may go out the window when this happens, in addition to perspective.

Some long-term investors keep focus. Warren Buffett does. He has famously said that an investor should, “buy into a company because you want to own it, not because you want the stock to go up.

Buffett often tries to invest in companies whose shares may perform well in both up and down markets. He also has famously stated, “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.”

In contrast with Buffett’s patient long-term approach, investors who care too much about day-to-day market behavior may practice market timing, which is as much hope as strategy.

To make market timing work, an investor has to be right twice. The goal is to sell high, take profits, and buy back in just as the stock market begins to rally off a bottom. But there is volatility in financial markets and the sale at any point could result in a gain or loss.

Even Wall Street professionals have a hard time predicting market tops and bottoms. Retail investors are notorious for buying high and selling low.

Investors who alter their strategy in response to the headlines may end up changing it again after further headlines. While they may expect to be on top of things by doing this, their returns may suffer from their emotional and impatient responses. Stick to the strategy you have implemented with your financial advisor. Have any questions about yours? Reach out to the team at Epic Capital to discuss your options.

Nobel Laureate economist Gene Fama once commented: “Your money is like soap. The more you handle it, the less you’ll have.” Wisdom that may benefit your strategy, especially during periods of market volatility.

For more insights and resources, be sure to sign up for our Weekly Market Commentary. Follow our YouTube channel where we regularly post our Epic Market Minute videos. Follow us on LinkedIn, or like us on Facebook. And as always, please don’t hesitate to reach out to a dedicated service professional at Epic Capital.

Tags: , , , , ,

More Insights

Mar 27, 2024

Investment inaction is played out in many ways, often silently, invisibly, and with potential consequence to an individual’s future financial security, especially when it comes to retirement planning. Let’s review some of the forms this takes.

Mar 25, 2024

Election season is in full swing as Super Tuesday solidifies another Biden and Trump rematch this November. President Biden won all 15 states and the Iowa caucuses, while former President Trump won in 14 of 15 states, prompting Nikki Haley to end her election bid.

Mar 22, 2024

Creating an estate plan is a key component of achieving financial wellness Most people don’t spend too much time thinking about end-of-life planning on a daily basis. But you may have loved ones who will soon face those issues. While it’s not pleasant to think about, you may be the one who ends up having … Continue reading “Eliminate the Guesswork in an Estate Plan”

Mar 20, 2024

When you marry or simply share a household with someone, your financial life changes—and your approach to managing your money may change as well. The good news is that it is usually not so difficult.

Mar 18, 2024

The year 1995 was an exciting one. Michael Jordan came back from retirement, digital video disks (DVDs) were invented, Netscape went public after introducing the world to the internet via its web browser, and Coolio’s “Gangsta’s Paradise” was the song of the year. It was also an exciting year for investors.

Insights + Resources >