Long Term Investing Tip: Avoid Stock Quotations and Financial News

Beware of the minute by minute news and stock quotations. They are not good for your health and your portfolio. I admit to doing this more than I recommend because it is a difficult habit to get rid of. I invest in stocks and do not intend to sell for years. Therefore I do not need a daily stock quotation or any piece of financial news. Once financial news about my company that I own is out, then it immediately gets priced in and I am too late to trade. Often times this can erode one's returns dramatically. Financial news is seductive to the point where I want to review every hour what the news of the day is. They act as if they are telling me something important that I must act upon. I am not in that game.

I am in stable businesses that have enormous moats of safety and dividends and do not need to check quotes every second. Checking quotes and CNBC.com or Bloomberg can actually make you a worse investor and may make it more likely that you trade. I have done this a few times as well, and focusing on the news or the Federal Reserve and made a trade to the downside.

Mentally, it is not good if I focus on quotes or check the news. In fact I need to get away from it as much as possible. The smartphone has made it accessible for anyone to check business conditions any minute of any day. This has never happened before in the history of Man.

Checking stock quotations on your smartphone can make you sick. It certainly increases my stress levels when I do this. It is like gambling at the casino, you want to win, but it is out of your control. The next item is to determine if you have a large enough emergency fund to withstand any unemployment shocks for at least a year. If so, then you do not need to check stock prices at every moment. Of course we want our net worth to increase, but this does have a profound effect on individuals that are sensitive to price changes. Back in 2008 I did not even have a portfolio but I wanted to check the financial news because I thought that would make me a better business student. This is far from the truth. The more business news I was receiving, the more negative I was getting. I was becoming a victim from my habit of watching CNBC. I was getting a daily barrage of negative news about the economy and it was affecting my life. Unfortunately I did not realize this at the time and it would have been better to avoid watching that TV Channel.

Prices of stocks are basically the price of a share of the business. Prices can fluctuate at any point in time, just like if I was to sell a McDonald's franchise down the street. Most likely however, I won't be checking the price of my McDonald's franchise and I will be focusing on the income that is derived from the business. From this moment on, I will avoid checking stock prices, SeekingAlpha.com, CNBC.com or Bloomberg as these can lead to adverse reactions as an investor. Similar to if I was checking Facebook and viewing my friends that are getting married and having babies causing distress to some, checking prices can cause negative reactions to people that are sensitive. I am focused on the long term and I do not need to check the price of my businesses every day and every moment.

My professor said in one of my personal finance class and said: do not check your stock portfolio every day. Some people people get worried or upset when they see red in their account. I believe this to be true even though I focus on income. I need to avoid stock quotations and financial news like I avoid visiting cnn and fox news.