Step Away From The Investment App!

by | Nov 17, 2017 | Asset Management

I don’t know about all of you, but getting a smartphone changed my life.  Sure, I had social media accounts before I had a smartphone, but my activity on those sites SKYROCKETED once I had the apps right on my phone.

I always told myself, “When I get an iPhone, I’m definitely NOT going to be like everyone else who is constantly glued to my phone”.  Boy was I dead wrong.

It’s become a part of our lifestyle at this point.  When you walk into a waiting room full of people or onto a bus or subway, majority of the time, instead of seeing people conversing or just staring off into space, they have their heads buried in their phones scrolling away.

At this point, whether you like this trend or not, it has changed the way people interact and it is NOT going away.  Trying to fight that trend is futile in my opinion, and in order for companies to stay relevant they need to embrace it.

It may sound like I’m not a fan of smartphones at this point, but that’s not the case.  I usually make the argument to people who say smartphones ruined our ability to communicate that it didn’t.  It merely changed the way we communicate.  If anything, our ability to communicate has never been better.  With just a few keystrokes and clicks on a screen, you can instantly share your thoughts with millions of people all across the world.  So let’s keep in mind that I DO think smartphones are very beneficial to society.

Except in one case.

I read an article a few weeks back from Daniel Egan titled “Outsourcing Self Control”.  In the article, Egan talks about using an app on his phone called AppBlock to be able to block certain apps on your phone for set amounts of time so that you don’t get distracted during your day.  They even show you the number of times you attempt to access the app while it is blocked to let you know how poorly you are behaving.

“I use AppBlock on my android phone to lock me out of inbound social media apps. It has a good lock function which means you can’t decide to un-block apps unless it’s plugged in (akrasia horizon!). I love that it regularly tells me how many times I’ve tried to check twitter when I shouldn’t. It’s eye opening, and a good reminder of how automatic and addictive using the app is.  I can still post using Buffer, and set up a more regular set of posts via MeetEdgar. But I’m restricted to about 3 one-hour blocks per day where I can consume social media.” – Daniel Egan

While Egan utilizes this app to focus and stay off Twitter, it got me thinking about other uses for it.

As I mentioned before, many companies have embraced the mobile app trend and created apps for their customers.  The investment industry is no exception to that trend.  Many investment firms now have their own trading platforms where clients can log in, view their accounts, and even place trades right from their phone.  For some people, like day traders, these apps are perfect!  Having instant access to up-to-the-minute data on your account and your positions?  What could be better?

Where these apps get harmful though is with actual INVESTORS.  Day trading your account and investing your money are two very different things.  Investing is more long-term in nature, and should not require day-to-day check-ins.  In fact, I would venture to say checking your investment portfolio every single day is only going to make you more vulnerable to making emotional, bad decisions with your money.  Watching the stock market fluctuate every single day is enough to drive anybody crazy.

The phrase “set it and forget it” is applicable to MOST investment accounts.  Now I’m not telling you to never, ever open your investment apps and monitor your account, but every single day?  You’ll drive yourself nuts, and most likely wind up costing yourself some serious money jumping from one stock or fund to another.

If you ask somebody to think of some famous instances when the market crashed, most people would be able to rattle off a few dates for you.


S&P 500 Historical Prices

Those individual times were very, very bad, and there have been some serious bear markets in between as well, but for a true LONG-TERM investor with a long time horizon, it should not have mattered as much.  Looking at the chart below, you can see the S&P 500 has essentially worked its way higher and higher over the years.

If you stayed invested through the financial crisis in 2008-09, you’ve now made back your money that you lost AND THEN SOME.  The same thing goes for the other crashes mentioned as well.  Obviously the game plan changes as you near retirement, and have to start withdrawing money from your accounts.  However, if you’re investing time horizon has many years left on it, the day-to-day, even sometimes year-to-year fluctuations in the market seem less significant.

The entire point is this.  Smartphones are an amazing piece of technology that have bettered a number of different industries, but long-term investors need to be careful about getting caught up in the minute-to-minute updates they get on their smartphone apps.  Long-term investors need to remember what is truly important, and what information is trivial in the big picture.

Some people might be better off using the AppBlock app and blocking themselves out of their investment apps, or just deleting the app altogether.

Your future self will thank you.

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