Justin here. American Public Media’s Marketplace has been asking different people that question (“what are you doing?”) since the start of this financial crisis. Today, they asked one of our favorite people: Dan Ariely
In this three minute ‘interview’ (listen below) Dan says that he has decided to not look at his investment statements. His motivation is more for peace of mind than anything else. Dan found that when he looked at his dwindling account it put him in a bad mood. In other words, worrying about it didn’t add a single day to his life (those are my words, not his . . . well, not really even mine.)
We’d agree with Dan’s advice . . . but with a caveat. We think two of the keys to successful investing are 1) finding a person (or process) that you trust and 2) sticking to them (or it.)
The “leg-work” is done in step 1 and “stomach-work” is done in step 2.
So, if you’ve done your leg-work in step 1 (picking a sound, rational, time-tested person or process), then the stomach-work in step 2 should be easier (not easy, just easier).
However, if you’ve been willy nilly in step 1 (following the talking heads, the cocktail party stock picks, or the advisor without a process), then step 2, well . . . you better keep that motion sickness bag next to your letter opener.