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With the easy availability of the internet and the smart phone, stock prices quote is always available at our fingertips. It is common for an investor to go through the stock price quote twice or thrice a day. Instant happiness follows if the investment stocks are in green while the opposite happens if they are in read.
Most importantly, even after a 100% return, the valuation was still cheap. John used to check the stock price two or three times a day. He was worried that after a 100% return within nine months, it might fall more. He was happy with the fact that he already bagged at 100% return nine months. If he had only concentrated on the business progress, management interview and quarterly result, then today he would have a return of more than 200%.
To sum up, checking stock price frequently can affect your investment in the following ways.
Early profit booking: The fear of losing money always exceeds the excitement of gaining big. Frequent price checks may force you to book small profits in high quality stocks that can otherwise multiply your investment over the long run.
Premature exit: We human beings are full of emotions. It is very difficult to accept the momentary loss. Irrespective of the fundamental, it a stock does not move over the 8-10 months period or if a stock does not move over the 8-10 months period or fi tit remains below our invested price, then it is hard to hold the conviction. In such situation, frequent price checking can lead to a premature exit.
Do not bother about short term price movement. In the short run, a quality stock can move in either direction but in the long term, it will only follow the fundaments. As an investor, you need to monitor your investment regularly. Monitoring does not mean following the live price quote. You need to act like a business owner. Keep a close watch on business/industry related news, quarterly result and management interview and that is enough.
Always remember that in the short run, a stock price can go up/ down by 10% to 30% with no reason. Do not make your investment decision based on short term price movements. It will be better off you can stop following the daily stock price quote.
