Investing Is No Field Of Dreams

Losing money is fun – said no one ever.

The same goes for watching your favorite team unravel in a heartbreaking loss.

The MLB did a great thing by creating a 2021 version of A Field Of Dreams.

There’s nothing like playing baseball in an Iowa cornfield.

Summed up in a classic line from the 1989 film.

Is this heaven? Asked Kevin Costner’s departed Dad in the film’s most powerful scene.

Costner replied, No, it’s Iowa.

I’m not crying. You’re crying.

My Yankees played Shoeless Joe Jackson’s Old team, The Chicago White Sox, in this magical setting.

The players entered the game, emerging through the cornfield. Kevin Costner provided some play-by-play.

What could be better than this?

Unfortunately, the 2021 Yankees are setting a record for devastating losses in a single season.

This night was no different.

Trailing 7-4 in the ninth inning, they hit two homers taking an 8-7 lead off the best closer in baseball.

True to form, the wheels came off the wagon. The Sox hit a two-run HR, and the Yanks lost the game 9-8.

How did I handle this latest debacle?

I went to bed – In the eighth inning.

I can hear the trolls now.

What kind of fan are you? How could you abandon your team? Loser!!!

Nope. If I learned anything in my 5 decades on this planet, loss aversion hurts bad.

Loss aversion is a big part of behavioral economics.

For example, finding $10 is great. However, losing the same amount feels twice as bad.

Exactly why going to bed in the eighth inning of close Yankee games works for me. Knowing a comeback win never compensates for the agony of a heartbreaking loss. Missing out on comebacks is well worth the price of heart-wrenching losses.

Many people might disagree with this strategy, to each his own.

What does this have to do with your investments?

Plenty – Understanding the toxic effects of loss aversion saves much anxiety and needless worry.

Here’s how you can apply some of these principles to save your sanity.

  1. Don’t check your portfolio daily. It’s a coin flip whether the market rises or falls in this time frame. The odds are you will be disappointed more often than not.
  2. Avoid this at all costs during market crashes. Think of how loss aversion becomes turbo-charged when losses are in the 20-30% range. Worse, this terror may cause you to do something you’ll regret later. How many investors failed to follow this advice and sold their stocks during the initial COVID outbreak?
  3. Always follow rules #1 and 2.

Your retirement portfolio is more important than a baseball game.

Temporary losses are the reason making money in the markets over the long term is highly probable. Volatility is a feature, not a bug of investing.

Remember this the next time you have the urge to experience in real-time short-term temporary losses. You may not like what you find.

Would you please take my advice and stop constantly checking your portfolio?

Going to bed works for me.



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