The Arbor Outlook: Social Media and Market Mania

“It’s just another manic Monday… I wish it was Sunday… That’s my fun day… My ‘I don’t have to run’ day…”
— from “Manic Monday” as recorded by The Bangles

Bothered that your kids or grandkids can’t focus for 15 seconds without checking an electronic device? Worried that you yourself are a slave to your iPhone or the internet? Almost have a wreck because a pedestrian mindlessly entered traffic in front of you while staring at his phone?

When folks are paying money to be counseled on how to disengage (digital detox) from their electronic devices, it’s obvious there are some troublesome side effects to frequent use of high tech communication tools.

When the need for immediate technical gratification overlaps with investing, significant problems can occur. Investors who check their accounts as frequently as they do their messages can become frustrated and sometimes even disillusioned in a very short time with the performance of their securities. They may expect their investments to bear fruit at the speed of their texts. These investors probably shouldn’t try to grow cucumbers or tomatoes. Gardens grow in season and plants bloom at their own rate. You don’t bring a hibiscus shrub to full growth in a few days or plant carrots on Tuesday expecting to pull and eat them three days later. “Liking” someone with an electronic click is quite different than cultivating true friendship over the course of time.

Investments take time to grow. Most investment advisors will tell you that seeing significant progress in a portfolio requires a three- to five-year time horizon. In today’s environment, an investor who can exercise patience and vision for even 18 months is at a distinct advantage. Naturally, there are exceptions and outliers, depending on the investor’s goals, age, risk tolerance and financial situation.

But the maturity and patience to adhere to a definitive time horizon is at odds with our instant gratification culture. Novice investors who want a home run within three weeks or even three months are often sorely disappointed to discover that successful investing resembles a marathon, not a sprint.

Moreover, some investors are after more than immediate and outsized returns. They may want their investments to generate income and may be willing to accept an occasional dip in share price appreciation in order to achieve it.

So how often should we check our investments? This will always vary, again, depending on the investor’s purpose, age, risk tolerance and goals. I check my clients’ accounts frequently, but that’s my job. I often counsel them to “turn off and tune out” for a week or a month at a time. Fretting over constant share price appreciation or dips on a daily basis helps no one. Click here if you “like” this.

Margaret R. McDowell, ChFC®, AIF®, author of the syndicated economic column “Arbor Outlook,” is the founder of Arbor Wealth Management, LLC, (850.608.6121 – www.arborwealth.net), a “fee-only” registered investment advisory firm located near Sandestin.