Portfolio report porn is a curse

FinHabits: Monthly portfolio updates are causing more harm than good

May 17

Human beings are voyuers by nature. We love a good gossip. People-watching is a well-established hobby, practiced by many at your local mall, park and even while dropping off your kid at school. My grand-aunts lived their final years in our rural ancestral home and perfected the art of knowing everything that happened in their small town, by sitting at the front porch in the morning and evening, gathering tit-bits from the milkman, the bread man, the odd neighbor who walked by and the local butcher.

A few years ago, as social media took off, it became established practice for investors to post their monthly portfolio reports online. The goal was meant to be two-fold - to share your holdings (mix, position sizes and historical performance) and to engage in a dialogue about which stocks are a better investments . While the market was going up and to the right, it all worked out well.

But as markets turned south, some of the downsides of this unholy practice started emerging. Here is what we are now seeing:

Surprise, surprise…stocks don’t always go up. They can also go down, irrespective of which fintwit celebrity holds a position.
Past performance is not a guarantee of future returns. 2020 is so done. Anyone still touting their past performance is varnishing the current reality.
Someone else’s portfolio mix is almost never the right set of holdings for me. Blind-copying a portfolio from the internet is leading to extreme investor pain….I am seeing more and more heart-breaking examples of this recently.
Discussions on investing forums have become heated with name-calling and blame being thrown around frequently.
Folks have even started taking satisfaction in seeing deeper negative returns in others’ portfolios. “Hey, I am not doing as bad at him, eh?”…add your favorite relief emoji here.

These are the portfolio-related finhabits I am trying to adopt consistently:

Take a monthly snapshot of my portfolio on the first of each month.
Review the YTD returns for the portfolio and for each holding, including the position % distribution and cash-on-hand situation.
Identify 3-4 things I want to keep an eye on or even changes that I may want to make for the next month.
Shortlist stocks that I want to buy more/trim/sell based on conviction changes (this is actually a weekly exercise).
If I see a portfolio report online, I only look at the list of stocks to check if there is a new idea that I want to investigate. That’s it.

An investment portfolio is very personal and needs to be fine-tuned to one’s age, life situation, risk tolerance, income stream etc. Posting it online has no real benefit to you. Reality is…no one cares about your portfolio and it’s returns.