The Benefits of Zooming Out

A good piece by Rational:

https://rationalreflections.substack.com/p/the-benefits-of-z…

If you are a long-term investor, it is worse than pointless to update the quotes for your portfolio on a daily basis. There is simply too much day-to-day noise to make this exercise meaningful…

I’m guilty of this. I have a spreadsheet that downloads quotes. I have Quicken. I have a list of tickers on my home page.

I do not know of any incident yet where I have made an emotional mistake due to excessive exposure to market quotes. Still, there is no reason to play with fire.

Same.

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I also recently read the idea that “once you’ve won the race, stop running”. If you have a secure retirement, pull your money out to safety. That runs counter to other advice I have read (i.e. “if it ain’t broke, don’t fix it”). But if I met my goals, why continue? Just to keep score?

In my case, now I have to wait to pull the money because I sustained the losses everyone else did. I can still retire, but I was happier with the larger cushion.

When stuff rebounds, I’m gonna start selling, and moving to boring funds. I’ll still keep a bit of money in stocks. All my pre-tax retirement stuff is in MFs. My post-tax stuff is in the brokerage.

I also recently read the idea that “once you’ve won the race, stop running”. If you have a secure retirement, pull your money out to safety.

Sounds good in theory. In reality, there is no “safety” as on forget about it and go fishing. Bonds are no longer the safe havens of yesteryear. Cash got walloped with 9%ish inflation in the last 12 months. Stocks are about back to where they were in early 2021. Real estate has had a great run, but with mortgage rates close to 6%, up from just 3% at the end of 2021, how’s that gonna work going forward?

My own definition of “once you won the game, stop playing” is to have a portfolio of 50% broad based stock index fund (like Vanguard Total Market or perhaps with some indexed international) and 50% indexed municipal bond fund, with a duration of not more than 5 years. Even that is getting somewhat clobbered this year. But over the long haul (I am a few years away from retirement), I think it’s about as good a risk/reward/safety thing as can be had in today’s world without market timing and/or speculating (which has odds that aren’t too good). I’d love to have a “park 25 years worth of retirement spending money here and it will be guaranteed to keep up with inflation, after tax” thing. But it doesn’t exist. So 50/50 seems about the best that can be done.

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If you are a long-term investor, it is worse than pointless to update the quotes for your portfolio on a daily basis.

Given the investment used as an example in the article, I would agree it doesn’t make sense to update your portfolio value on a daily basis. However, if your traditional IRA is managed by a third-party and is invested in individual securities, daily transactions updates does make sense simply to show the changes in the securities that you actually hold.

Like AdrianC I use Quicken to maintain information about my tax-deferred IRA and taxable investment accounts. I’m not going to make any rash changes to my holdings simply because there was a -$200K change in the market value on a given day last week.

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"A good piece by Rational:

https://rationalreflections.substack.com/p/the-benefits-of-z…

If you are a long-term investor, it is worse than pointless to update the quotes for your portfolio on a daily basis. There is simply too much day-to-day noise to make this exercise meaningful…

I’m guilty of this. I have a spreadsheet that downloads quotes. I have Quicken. I have a list of tickers on my home page.

I do not know of any incident yet where I have made an emotional mistake due to excessive exposure to market quotes. Still, there is no reason to play with fire.

Same. "


Monitoring your holdings daily is not a problem - tends to be a necessity.
How else would you find out what the company is actively doing? There are reasons for people to buy
and reasons for people to sell holdings. Not all are related to market moves - but all require
a person to keep their eyes and ears open.

Howie52
There is more to investing than Mr. Market and whether Bulls or Bears are running in the streets
or in the news coverage.

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No, but Berkshire is probably as close as you could get. Three years cash and twenty two years brk. Way better than even money you won’t run out. Simple management of when to sell,if possible wait for 1.45 times book value. If not possible,sell 5% per year at most for fulfill income requirement.

Jk

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No, but Berkshire is probably as close as you could get.

Yes – BRK solves a lot of problems.

intercst

I also recently read the idea that “once you’ve won the race, stop running”. If you have a secure retirement, pull your money out to safety. That runs counter to other advice I have read (i.e. “if it ain’t broke, don’t fix it”). But if I met my goals, why continue? Just to keep score?

You won’t be following the SWR if you pull all you money out to safety. You need to keep at least 60% in the stock market.

PSU

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"You won’t be following the SWR if you pull all you money out to safety. You need to keep at least 60% in the stock market.

PSU "


For a large number of folks, pulling all your money out of the market would kick their annual
income above the point where the added costs for Medicare would become a factor.

Howie52
Neither fear nor greed is a good reason to rush into decisions.

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Agreed. Pulling everything out would make for a big tax bill.

My preference is to trim the more speculative holdings but keep quality stocks (with large accumulated gains) in hopes they will recover. Not to the old new highs but from still profitable bottoms.

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Yes. I’m just thinking out loud. I don’t need to keep score. Bonds are not really “safe”, except government bonds. I don’t need to hit anything out of the park anymore, just have moderate growth so I can draw-down as needed without fear of running out.

1poorguy

Bonds are not really “safe”, except government bonds.

I would say that even government bonds can have risks, primarily inflation risk, especially if you don’t hold them to maturity. And depending on which government you buy them from, there could be default risk. Even the US government has tiptoed close to that line at times, and with the very divided political environment, it’s not clear that they won’t cross over that line at some point.

AJ

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For a large number of folks, pulling all your money out of the market would kick their annual
income above the point where the added costs for Medicare would become a factor.

Howie52

Not with the interest rates of the past few years.

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<<For a large number of folks, pulling all your money out of the market would kick their annual
income above the point where the added costs for Medicare would become a factor.

Howie52>>

Not with the interest rates of the past few years.

I pretty sure Howie is talking about the capital gains taxes you’d pay on selling stock and going to cash in market timing.

intercst

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Given the investment used as an example in the article, I would agree it doesn’t make sense to update your portfolio value on a daily basis. However, if your traditional IRA is managed by a third-party and is invested in individual securities, daily transactions updates does make sense simply to show the changes in the securities that you actually hold.

Seems like you don’t trust your manager if you have to check up on them every day.
If you trust them, knowing what you own on a daily basis changes nothing.
If you don’t trust them, why use them?

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Monitoring your holdings daily is not a problem - tends to be a necessity.

It’s far from necessary, unless you’re a day-trader.

Read the 10Qs and 10ks and annual report. What else is there, really?

Daily price quotes tell you nothing.

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I also recently read the idea that “once you’ve won the race, stop running”. If you have a secure retirement, pull your money out to safety. That runs counter to other advice I have read (i.e. “if it ain’t broke, don’t fix it”). But if I met my goals, why continue? Just to keep score?

Bill Bernstein is fond of saying “When you’ve won the game, stop playing.”

There’s a few articles and podcasts he’s on out there. Here’s one:

https://www.wsj.com/articles/how-to-tell-if-your-retirement-…

He’s well worth reading.

Now, I don’t follow his advice, though. We’ve won the game and can afford to still take risks. If our portfolio is cut in half we’re still good. So we still invest in stocks because it’s not for us any longer.

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In my case, now I have to wait to pull the money because I sustained the losses everyone else did. I can still retire, but I was happier with the larger cushion.

When stuff rebounds, I’m gonna start selling, and moving to boring funds

That assumes things will rebound. They might but it might also take a long time to do so. We’ve been a bit spoiled with stocks recovering their losses very quickly in the last few “corrections”.

Right now with inflation, low interest rates, poor stock performance, sky high housing, it is tough to find a safe haven. Do stocks rebound from here or drop another 20-40%? Depending on where you are in life, can you afford a 40% drop since it could be a decade to recover it?

I’m pondering my options.

Rich

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"Seems like you don’t trust your manager if you have to check up on them every day.
If you trust them, knowing what you own on a daily basis changes nothing.
If you don’t trust them, why use them? "


Recognizing that situations and methods change is not indicating a lack of trust.
Change happens continuously and not only on the management side of the coin. Companies
change direction - Fund managers change - Fund’s interpretation of their investment premise
change - investors’ needs change. The market is a tool people use as well as an indication of
where people think the economy is headed. Trust is not really at issue - monitoring performance
and understanding what is driving your investments is important.

Howie52
Also happens to be enjoyable and interesting. However, this does not mean folks have to “do”
something about the information unless they choose.

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Howie52 observed:

Trust is not really at issue - monitoring performance and understanding what is driving your investments is important.

Also happens to be enjoyable and interesting. However, this does not mean folks have to “do”
something about the information unless they choose.

Trust, but verify that your manager is doing what you had intended. The assets in my portfolio are constantly changing. I receive dividends and interest from my investments that are used to purchase additional investments. Corporate acquisitions and divestitures change the assets currently held. Assets are sold and the proceeds are used to purchase other assets.

Personally I will continue collecting transaction data on a daily basis. This doesn’t mean that I will “do” anything with this data but it does make me more comfortable.

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