4 Alarming Things That Could Happen If You Check Your Investments Everyday

There is behavioral bias called loss aversion that shows that the more frequent evaluation of outcomes makes one feel their losses more than their gains. Investors who review their portfolios more frequently have tended to shift toward more conservative exposures, as increased monitoring raises the likelihood of seeing (and reacting to) a loss.

Here are Four Data Points You Need to Know:

1. An experiment showed that investors with infrequent price information invest around 33% more in risky assets than investors with more frequent information do. Furthermore, those with more limited access earned 53% higher profits.
2. While the time horizon is different for each investor, frequent changes to your risk allocation can significantly harm your long-term financial goals.
3. You can see loss aversion outside of investments. Golfers avoid the possibility of loss by playing conservatively when they have the opportunity to do better than par but will try harder if they are at risk of coming in worse than par.
4. Working with an advisory team trained in behavioral coaching can potentially offset one’s tendencies to these biases.

Chart Source: Fidelity, 3/29/2019

Source: Thaler, R.H., A. Tversky, D. Kahneman, and A. Schwartz. “The Effect of Myopia and Loss Aversion on Risk

Taking: An Experimental Test.” The Quarterly Journal of Economics 112.2 (1997), used by permission of Oxford University Press

Past performance is no guarantee of future results.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Fusion Wealth Management is not affiliated with Kestra IS or Kestra AS.