How often do you look at your investments? Once a week? Once a day? Every 30 minutes?
In Jason Zweig’s book Your Money and Your Brain he quotes a study by Money magazine that found 22% of people look at their investments every day while 49% look once per week.
On the surface this doesn’t seem like a big deal. But we’ll break down that assumption quickly. Let’s first go to the brain.
Your Brain loves Patterns and Problems
Our brains are pattern seeking and problem solving machines. It is what they have evolved to do. It is so inherent in us that we rarely ever think about it but we are constantly doing it. And it’s a good thing too. This pattern seeking and problem solving nature has been vital to our survival throughout human history.
For example, think about when you hear leaves rustling at night. Your brain lights up and you are more alert. There are many other sounds reverberating through your ear drums at that moment, the sound of birds, of kids playing next door, of an air conditioner kicking on or a car driving by. But none of those sounds trigger the alertness that the rustling leaves do.
It’s because your brain has evolved to attribute leaves rustling with some sort of potential threat. So you hear the leaves and your brain knows it needs to pay attention to that sound, while disregarding the others. Your brain recognizes the pattern of leaves rustling with potential danger, so it solves the problem and heightens awareness.
So be glad your brain does this for you, but that’s where the good news ends. Because as good as these brain functions have been for our survival, they are equally as bad for our investments.