Sleepless in Harwich

Two times a dad, our multi-asset investment specialist Craig Brown is finding it hard to learn old lessons. Like with investments, sometimes it’s painful when you just can’t leave things be…

Lighted window at night

By Craig Brown

I recently became a father for the second time, so I’m back on the hamster wheel of sleep deprivation, nappy changing, and bottle washing. Of course, my wife and I have the added bonus of keeping a two-year-old entertained as well – no easy task at the best of times!

As if parenting isn’t enough work, I continue to suffer from an inclination to check in on the two of them whenever they’re asleep. Over and over again. The slightest noise – or indeed lack of noise – leads me to head over to their rooms and peer in to establish all is well. Unfortunately, to my wife’s endless dismay, I’m no ninja. I creep like a rhino creeps. So I often end up disturbing one or both of the tykes, and then have to spend the following 20 minutes soothing them back to sleep.

I never learn my lesson either. I end up checking up on them again – just to make sure that they are all sorted after my last botch-up – and then the cycle loops round and round and round …

As I spend the not-so-quiet small hours rocking my babies back to sleep, watching the clock tick terrifyingly close to the hour when I have to return to the office, my mind starts to blur. I feel like I’m comforting investors, and I’m trying to soothe them by telling them not to feel like they have to constantly check in on their portfolios. That I can identify with their urge and the worries but that it will only lead to regret and sleepless nights … 

Like endless and often contradictory parenting advice drives us to disturb our kids’ sleep, the 24-hour news cycle encourages investors to continually check up on their portfolios and judge success or failure, over weeks and days. Even the professionals are falling into the trap, with so much analyst and market commentary focused on the latest quarterly numbers and the prospects just three months ahead.

This increasing focus on shorter and shorter time periods is terrible for investors in the long term. Checking in too often and trying to read too much into short-term performance can lead to the feeling that you have to “do something” with your portfolio. This short-term meddling becomes habit and all the while the trading costs rise.

It’s better for someone to understand how they feel about risk and how much they can afford to take on, find investments that suit their situation and inclination and give the whole portfolio time to perform. We all know investing is full of ups and downs, it’s the nature of the beast. But a few downs in a row doesn’t mean an investment is necessarily a bad one.

If you invest in yesterday’s winners after selling yesterday’s losers, you may find yourself – and your portfolio – as low as a tired father of two who just couldn’t let well enough alone …