Nearly a month ago I made an RRSP contribution and used the money to buy an index ETF. I then watched how it performed 10 minutes later, an hour later, a day later, etc. Even now I find myself more interested in how this ETF is performing than the rest of my portfolio. This happens every time I make a new investment or add to an existing one.
Of course, this is all irrational, but I just couldn’t help being pleased that the ETF stayed above my purchase price during the first day. It shouldn’t make a difference to me whether I make $100 on this investment or some other one, but it does. I do my best to keep irrational emotions like this from affecting my decisions, but that doesn’t stop me from having the emotions.
I assume I’m not alone in this need for new investments to perform well. Do other investors find themselves caring more about recent purchases than the rest of their portfolios?
"Do other investors find themselves caring more about recent purchases than the rest of their portfolios?"
ReplyDeleteI don't believe it's so much related to the fact that it's a 'new' investment. I believe most investors want to be 'ahead' with each investment. They already know where they stand on others, so the 'new' one attracts their attention.
"It shouldn’t make a difference to me whether I make $100 on this investment or some other one, but it does"
I agree completely: It does not matter where the profits originate.
I see too many investors desperately trying to reach 'break even on a losing trade - doing anything to avoid taking a realized loss.
They could make more money, more quickly in a different position, but they are stuck with the loser - attempting to make it a winner.
I believe it's the same. "New" investments are observed closely to root them into the 'winners' column.
Regards,
Mark
Mark: So, all of my other investments are already either winners or losers, and I'm hoping to cheer the latest one into the winners column. Interesting.
ReplyDeleteIt's like when you have a new child, it's much more interesting than your other child, so you spend all your time with the new one.
ReplyDeleteThe difference with your investments is, in a few years, your other investments won't complain about "How you like the ETF more than us!!!"
nice post. thanks.
ReplyDelete