26 August 2011

I like to look

Tess Vigeland* hosts my favorite radio show about personal finance** and over the past couple of years if there is one thing that she has said more than once it's that during volatile times like these we should just throw the investment statements in a drawer, unopened.  "Don't look!"

(Hmmm.  Maybe there should be more exclamation marks in that because Tess always sounds very emphatic when giving this particular piece of advice.)

I respect Tess immensely and enjoy her reporting but I have to say:  I like to look.

In fact, I look every week.  On Monday morning, as a matter of fact.  I've kept a series of Excel spreadsheets (one per year) for the past ten years.  The data?  The balance of my 401(k).  The purpose?  I do better with feedback.  When watching my weight, I get on the scale.  When I was digging my way out of debt, I paid lots of attention to my bank balance and those debts with my lists and graphs and calculations***.  If I could figure out how to as quickly and easily quantify how many lines of dialogue I know versus how many I need to know, I'd do that, too.  And probably learn the darn lines faster.****

I know that sometimes the news will be good and sometimes it will be ... less good ... but locking in losses when the numbers are down remains a poor idea.  So I look.  And I chart.  And I leave my 401(k) alone.  Every few years I rebalance but not during a volatile period.  And I look.  And I chart. And I make jokes about which brand of cat food Pekoe and I will be sharing during my golden years.

Oddly enough, I started doing this charting three months before 9/11 so if you look to the left you can see the  10 percent drop in my balance after that awful day.  It was a scary drop at the time but the balance recovered in a few weeks and compared to 2008 it can't even be seen.  From May of '08 to March of '09 I lost 40 percent of the then current balance.  Right now I'm down 8 percent from just before the whole Debt Deal mess.  But the numbers on the right are still higher than the numbers on the left. Up and down, up and down, but generally up.  Looking has taught me to take the long view.  I'm saving for the future, not for this morning's balance.

As I like to say, if I look out of the window during the winter and see that it is snowing, I don't throw away my summer clothes.  So I look.  And I graph.

I like to look.

*It's pronounced Vigg-land even though it looks like Vie-gland.  Sort of like it's pronounced Lee-tah even though it looks like Lett-uh.  Those who can pronounce us can't spell us and vice versa ...

** Okay, there's not a large sample, I realize.  Not the point. The show is awesome, as is Tess.

*** And lines and circles and a few paragraphs on the back.  

**** When a friend was in labor and said that she wanted to go to the midwife's office to find out how dilated she was because she "needed to know the numbers" it made perfect sense to me.  Of course, if it hadn't made perfect sense to us, then her husband, mother, and I might have recognized this for the class transition phase thinking it actually was.  S'okay.  We got to the hospital with several minutes to spare. What?

1 comment:

Maureen said...

I'm more a "set it and forget it" investor; I look maybe a few times a year and reset rarely. Ray, on the other hand, checks daily. Neither one of us graphs, but I do understand why you do. There's a lot to be said for the long view. (And you're right, Tess is awesome.)