With Apple not allowing us to delete its pre-installed iPhone apps, may of us take to hiding them away inside a folder on the ‘back’ screen where they at least don’t get in the way. But a report in the WSJ suggests there’s another reason you may want to hide the Stocks app: using it too often can lead you to make poor investing decisions.
The report references a phenomenon known as myopic loss aversion, in which people are likely to sell stocks when they see frequent downward movements – even if the long-term trend is up.
When people are frequently told how their investments are doing—say, if they are given a daily update on their long-term investments, by smartphone or any other digital device—they are more likely to make poor financial decisions and possibly sell at the wrong time.
The reason frequent checks are risky is that the more often you look, the greater the chance you’re going to see a drop in the price. And that has nothing to do with the stock’s performance, it’s just stats.
If you check every single day, there’s a roughly 47% chance that the market will have gone down, based on its past movements. But what happens if you check once a month? The numbers will start to look a little better, as the market will only have gone down 41% of the time. Years are better still, as the S&P generates a positive return seven years out of every 10. And if you check once a decade, then you’re only going to get bad news about 15% of the time.
So if you want to make the best investment decisions, it seems the smart money is on leaving the Stocks app well alone.
Apple has come under criticism for continuing to offer a 16GB iPhone in 2015, but defended the decision on the basis of cloud storage and app thinning.
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80% of the articles in the Stocks app are clickbait. Many of those articles not only contain misleading information, but also false information. Buyer beware!
Silly. The market goes up and down, that’s the way it works.
The trick is not to look, but to look at other metrics that help to reinforce the habits/behaviors you’re trying to reinforce.
By not looking, you’re pretty much sticking your head in the sand for something important… would you send your kids to school in September and “not look” at how they’re doing until they graduate the year the following summer? Probably not.
Money is important. And, there’s not enough education around personal finance and building wealth – though there’s a lot of “hearsay”. I don’t think we’re serving anyone by saying “don’t look” (besides, when I’m told not to look at something, I can’t help myself from looking even more).
While the metrics that I suggest tracking can’t be done in the standard stock app – I use a google doc spreadsheet, linked to live market data (delayed, but automatically updating) and track the “paycheck” my investments bring in and the annual raise I get to that paycheck (I invest in dividend paying stocks, companies with long histories of raising their dividends annually). In this way, I get raises almost every month of the year, and can watch my paycheck go up over time, rather than tying my emotional state to the expected up-and-down volatility of the underlying share prices.
Here’s a blog post that talks about some of this in more detail using some research on Disney as an example: http://elephantspaycheck.com/core-principles/the-discomfort-of-investing/
David
Not sure what the purpose of the last sentence was for? Just seems a bit out of place in the article to me
Wall Street is a ponzi scheme. It didn’t start off that way. It was originally a credit reporting agency.
Yes, you can point to success from investing. That is how every ponzi scheme works. It gets people hooked, and the true-believers become advocates to seduce the next round of pigeons.
Unfortunately, where money comes from is as important as where it goes. It does not come from the business profits, it comes from the other players in the scheme. Of course, everyone wants the share value to go up, and for more people to play. That is why no matter what the market does, you hear a chorus of ‘buy now.’
Unwind to a more basic reality: If you can get paid without working, then someone must be working unpaid. At best, it is a slave system by proxy. At worst, it is the root cause of fascism, war, genocide, etc.
The best thing that could happen in global finance is for everyone to divest from Wall Street. That would reduce the very inflation that is claimed to make it necessary to invest. The economic volatility we are experiencing is a man-made event. Greed is not good. Never was and never will be. There are better ways for businesses to get funds to expand, if that is what they need. In reality, the easiest way to get rich is to issue the stocks. Every stock is a private ponzi scheme. Wall Street is an apparatus built around that, essentially a conglomeration of ponzi schemes.
I guess Steve Jobs didn’t Think Different enough. A genius and a fool in the same body.
I think this article is click bait. Certainly it’s much-ado-about … not much. I’m not saying finances aren’t important, I’m saying, trying to make too big of a deal about hiding built-in apps, is. I’ve only recently subscribed to 9to5mac tweets, is this a pro Mac/Apple site or is it one of those click-baity sites that bend with every breeze, while claiming objectivity, in order to get clicks? ‘Cause it’s sure seeming that way to me, so far. I can go to a thousand different places to get a “balanced” perspective about using Apple products, but I don’t want to be bamboozled (is that how you spell that?!). Guess we’ll see. Cheers.