Friday, November 9, 2007

Why you shouldn't check your mutual fund balances every day

Ok. This is some advise just for everyone else besides me. Don't check your mutual fund gains every day only look at 3 to 5 year performance.

Of course I never do that. I personally like to look every day just so I can feel that pain and guilt for making the wrong investment changes.

Anyway, so I'm finally happy with a day's returns. I want to capture it here so I can feel good. Observe the following gains:

A while ago, after Artisan went up 10% I sold a bunch and bought Dodge. Then Artisan went up 10 more percent and Dodge went up like 1. I has been hard, since I am obsessed with watching the totals every week, to not buy Artisan back.

Well look at the chart. Notice how Dodge & Cox has gone up while Artisan Mid Cap has gone down 1%? Take that Artisan, you volatile pile of junk. I will not surrender to you. I will not come back and buy you just because you are doing well now. I am better than you. I will not be controlled!


joe said...

Artisan is a mid cap fund. In a recession mid caps will get pinished (but not as much as small cap) but mid caps bounce nicely back after a recession (but not as much as small caps) which is why its 5 year return has been so well but its 10 year chart saw a 50% drop in value before improving. That's why its not doing well recently because everyone thinks the US is going to slow down or go into a recession.

Your Cox fund is more recession proof so people are putting money into it now in prep for the slow down in the economy. So they take money out of there artisn to put it in cox and then other people go "look mom my cox is moving maybe I should give it more attention with my money" So now the cox moves more and artisan does not.

What this means is after the "recession" you will kick yourself for missing "the big move" in artisan and crawl back to it. However, now that you read this you may want to jump the gun and invest right now in artisan which results in you losing 50% of your holdings because we have yet hit the economic slow down.

Brad said...

I do the same thing- check my balances each day or so and for most of the same reason you do. Although I haven't sold a fund just because it went up 10% in some time frame. Rather, each and every fund in my portfolio has a special purpose in my longer term goal and I overlook short term swings. After all, when the fund goes down, that just means we can buy it more cheaply the next time.

Of course thanks to work being stupid, we get to throw away all of our funds and buy new ones for the 2nd time in 3 years! Yippeee.