Regularly checking your portfolio’s value doesn’t help its performance. Just sayin’.
MY OLD INVESTING self was like the guy in the meme who twists around to ogle a woman in a red dress, while his girlfriend looks ready to break his neck.
Just as jumping from one relationship to another introduces new risks, the same holds true for jumping in and out of different investments. For me—and for most people, I’d wager—investing in individual stocks and narrowly focused funds involves a certain amount of trading, and we know such trading is an exercise in futility. Even the vast majority of professional fund managers can’t consistently beat the market averages. If your reaction to that is, “Yeah, but maybe I can, I’ve got a good handle on the way the world works,” you may need professional help with your portfolio.
Despite ample evidence that most investors trail the market averages, we all tend to “feel lucky,” like the ill-fated villain staring down Clint Eastwood in Dirty Harry. Why? A key reason: Stock market averages get a big boost each year from a minority of stocks that post big gains, and those huge winners make beating the market look easy. So how about buying those big winners? Unfortunately, yesterday’s winners aren’t necessarily tomorrow’s top dogs.
In fact, past performance has no predictive power. It may seem obvious today that we should have bought Facebook, Apple, Netflix, Microsoft, Amazon, Tesla and Google’s parent company Alphabet. But these “obvious” winners only seem that way in hindsight.
On top of our unjustified confidence in our own stock-picking abilities, we have a host of other behavioral faults, including impatience, a desire for quick gratification and the feeling that the grass is always greener somewhere else. Result? In our efforts to beat the market, we flit back and forth among different investments, as our latest stock picks lose their luster.
After taking fliers over the years on gold and energy funds, biotech and telecom stocks, and emerging markets specialty funds that focus on consumer companies, I’ve learned three key lessons:
I came by these lessons the hard way. I would make a new investment and be excited, thinking I’d made a good bet. I’d anticipate my potential gains and the validation that I’d outsmarted the market. I would tell myself I understood the potential downside, but really, I was practically counting my winnings.
But the thrill would soon fade, along with my original investment rationale. Perhaps the idea had come from some legendary portfolio manager or from something I read. But when my new holdings struggled, I lacked a frame of reference by which to decide whether to sell or hold.
A star manager might have said a drug company’s clinical trials were going well or that certain companies were going to gain market share. But then these things didn’t happen, and the stocks underperformed. Was this bad news now fully priced in? It’s nobody’s job on Wall Street to answer that, least of all the managers who touted the investments in the first place, and they probably wouldn’t know anyway.
Another example: About six years ago, I read a series of articles that convinced me that the next big trend was emerging markets consumer spending growth. That prompted me to buy some high-cost niche exchange-traded funds. But the two funds I bought consistently underperformed. One has continued to do so since I sold, while the other folded last May. Again, no one can tell you when or if such performance will turn around. Wall Street gets paid to sell you high-expense funds and keep you in them. Those high fees pay for a lot of research, writing and marketing, which in turn filters its way into the financial press, which then encourages you to buy.
There are two sources of investment risk: systematic risk, which is the danger that the broad market will fall, and unsystematic risk, which is the danger that your particular investments will lag behind the market.
Investors in individual stocks and sector funds face both risks. By contrast, owners of broad stock market index funds face only systematic risk. Indexing lacks the allure of sexy strangers and the prospect of quick investment scores, but the strategy’s risks are also far lower.
Success in broad market-cap-weighted index funds hinges on fewer variables. You just need aggregate share prices—driven ultimately by corporate profit and dividend growth—to rise at well above the rate of inflation, as they have for more than a century in the global stock market, despite two world wars, hyperinflation, stagflation, market crashes, panics and depressions. In other words, with broad stock market index funds, you’re making just one bet—and it’s a pretty good one for globally diversified investors with long time horizons.
William Ehart is a journalist in the Washington, D.C., area. In his spare time, he enjoys writing for beginning and intermediate investors on why they should invest and how simple it can be, despite all the financial noise. Follow Bill on Twitter @BillEhart and check out his earlier articles.
[xyz-ihs snippet="Donate"]
Ed Marsh is a physical therapist who lives and works in a small community near Atlanta. He likes to spend time with his church, with his family and in his garden thinking about retirement. His favorite question to ask a young person is, “Are you saving for retirement?” Check out Ed’s earlier articles.NO. 3: WE SHOULD focus relentlessly on what we want from our financial life. That’ll motivate us to save, drive our investment strategy—and help ensure we pursue the goals we care about most.
ROUND UP the mortgage check. If you’re paying $1,512 a month, send the mortgage company $1,600 instead. It’s a painless way to increase savings, the extra $88 a month could allow you to pay off your mortgage years earlier and you’ll earn a pretax return equal to your mortgage’s interest rate. That return could be higher than you can get with high-quality bonds.
NO. 69: WE'RE typically happier when we have regular contact with others. Eating at a restaurant or going to a concert is more fun with a companion. Those who are married tend to say they’re happier, while widowhood can devastate happiness. Indeed, a robust social network is associated not only with greater life satisfaction, but also greater longevity.
NO. 6: SAVE WHEN you’re young—and you’ll enjoy big cost savings later. If you salt away money in your 20s and quickly amass a modest nest egg, you won’t just clock decades of investment gains. You can also cut your cost of living by, say, raising your insurance deductibles, borrowing less, and avoiding bank fees for low account balances and bouncing checks.
NO. 3: WE SHOULD focus relentlessly on what we want from our financial life. That’ll motivate us to save, drive our investment strategy—and help ensure we pursue the goals we care about most.
The risk of sensitive personal data leaks is higher than ever, fueling identity theft, phishing attacks, financial account hijacks, and scams. It’s also a time when nation-backed hackers skillfully target critical infrastructure like mobile networks. A major hack revealed last year led the FBI to advise trusting only end-to-end encrypted communications.
No security is foolproof against a determined attacker, but you can make yourself a harder target. Nancy and I have so far avoided major cybercrimes but have faced fraud attempts.
Who Is the Victim of a Ponzi Scheme?
Age: Often 50 or older, particularly retirees looking for stable income or to preserve capital.
Education: Many victims are college-educated—some with advanced degrees.
Financial Status: Typically middle to upper-middle class, with meaningful retirement savings or liquid assets.
Investment Experience: Usually have some experience, but not deep technical knowledge—confident, but not always skeptical.
Sounds like a typical HumbleDollar reader, doesn’t it?
Each year, 20 to 40 Ponzi schemes are uncovered in the U.S.,
SOME YEARS AGO, an elderly neighbor came to our door, asking for a favor. She was looking for packing tape because she’d sold her television and needed to ship it. She went on to say that the buyer, who she’d found on eBay, was in Nigeria. It was, of course, an obvious scam. But for whatever reason, she couldn’t see it.
Today, scams like this are better known and easier to recognize. But what makes online fraud such a problem is that the crooks are always developing new tricks.
I WAS A VICTIM OF identity theft. It wasn’t anything I did. Rather, it was what my former employer did.
During the pandemic, many employees were working remotely, including a member of the human resources department. She received an email from the CEO requesting that she send him the W-2s for all employees. So she did. Unfortunately, the email wasn’t from the CEO. It was sent from a shopping mall in Saudi Arabia.
As soon as she hit send,
There is an excellent article in the Wall Street Journal about how to find what there is about you on the internet and how to delete it if you want. Here is the Link.
I read the article followed the suggestions and it was very easy. I hope it works. Has anyone tried this?
IT HAPPENED AGAIN. For the third time in two years, our credit card number was stolen. I learned this yesterday when I received the now-too-frequent question from Chase: “Do you recognize this gas station purchase for $1?” We live nowhere near the station in question, so I knew something was amiss.
I appreciate Chase’s diligence in identifying such transactions, and the fact that we won’t be held liable for any fraudulent charges. Still, I’ve grown weary of the whole process of cancelling credit cards,
Questions Matter
Dan Smith | Mar 13, 2026
America Doesn’t Just Do Layoffs. It’s Fallen in Love With Them
Raghu | Mar 17, 2026
Retirement in America is not a pretty picture…and not getting better.
R Quinn | Mar 17, 2026
How to Lose
William Ehart | Jan 26, 2021
MY OLD INVESTING self was like the guy in the meme who twists around to ogle a woman in a red dress, while his girlfriend looks ready to break his neck.
Just as jumping from one relationship to another introduces new risks, the same holds true for jumping in and out of different investments. For me—and for most people, I’d wager—investing in individual stocks and narrowly focused funds involves a certain amount of trading, and we know such trading is an exercise in futility. Even the vast majority of professional fund managers can’t consistently beat the market averages. If your reaction to that is, “Yeah, but maybe I can, I’ve got a good handle on the way the world works,” you may need professional help with your portfolio.
Despite ample evidence that most investors trail the market averages, we all tend to “feel lucky,” like the ill-fated villain staring down Clint Eastwood in Dirty Harry. Why? A key reason: Stock market averages get a big boost each year from a minority of stocks that post big gains, and those huge winners make beating the market look easy. So how about buying those big winners? Unfortunately, yesterday’s winners aren’t necessarily tomorrow’s top dogs.
In fact, past performance has no predictive power. It may seem obvious today that we should have bought Facebook, Apple, Netflix, Microsoft, Amazon, Tesla and Google’s parent company Alphabet. But these “obvious” winners only seem that way in hindsight.
On top of our unjustified confidence in our own stock-picking abilities, we have a host of other behavioral faults, including impatience, a desire for quick gratification and the feeling that the grass is always greener somewhere else. Result? In our efforts to beat the market, we flit back and forth among different investments, as our latest stock picks lose their luster.
After taking fliers over the years on gold and energy funds, biotech and telecom stocks, and emerging markets specialty funds that focus on consumer companies, I’ve learned three key lessons:
I came by these lessons the hard way. I would make a new investment and be excited, thinking I’d made a good bet. I’d anticipate my potential gains and the validation that I’d outsmarted the market. I would tell myself I understood the potential downside, but really, I was practically counting my winnings.
But the thrill would soon fade, along with my original investment rationale. Perhaps the idea had come from some legendary portfolio manager or from something I read. But when my new holdings struggled, I lacked a frame of reference by which to decide whether to sell or hold.
A star manager might have said a drug company’s clinical trials were going well or that certain companies were going to gain market share. But then these things didn’t happen, and the stocks underperformed. Was this bad news now fully priced in? It’s nobody’s job on Wall Street to answer that, least of all the managers who touted the investments in the first place, and they probably wouldn’t know anyway.
Another example: About six years ago, I read a series of articles that convinced me that the next big trend was emerging markets consumer spending growth. That prompted me to buy some high-cost niche exchange-traded funds. But the two funds I bought consistently underperformed. One has continued to do so since I sold, while the other folded last May. Again, no one can tell you when or if such performance will turn around. Wall Street gets paid to sell you high-expense funds and keep you in them. Those high fees pay for a lot of research, writing and marketing, which in turn filters its way into the financial press, which then encourages you to buy.
There are two sources of investment risk: systematic risk, which is the danger that the broad market will fall, and unsystematic risk, which is the danger that your particular investments will lag behind the market.
Investors in individual stocks and sector funds face both risks. By contrast, owners of broad stock market index funds face only systematic risk. Indexing lacks the allure of sexy strangers and the prospect of quick investment scores, but the strategy’s risks are also far lower.
Success in broad market-cap-weighted index funds hinges on fewer variables. You just need aggregate share prices—driven ultimately by corporate profit and dividend growth—to rise at well above the rate of inflation, as they have for more than a century in the global stock market, despite two world wars, hyperinflation, stagflation, market crashes, panics and depressions. In other words, with broad stock market index funds, you’re making just one bet—and it’s a pretty good one for globally diversified investors with long time horizons.
[xyz-ihs snippet="Donate"]
Medicaid Asset Protection Trusts (MAPTs)
Bogdan Sheremeta | Mar 15, 2026
Well That’s A Bummer!
Mark Crothers | Mar 16, 2026
Is there any point when a child needs financial help that you feel comfortable saying “not my problem?”
R Quinn | Mar 14, 2026
What happens to Medicare Supplement coverage when moving to a different state?
Carl C Trovall | Mar 15, 2026
Frugal Fitness
Edmund Marsh | Mar 14, 2026
Why Marlboro Gold is better Than Gold
Mark Crothers | Mar 11, 2026
Developing Champions in your Career and Life
Raghu | Mar 14, 2026
The Anatomy of a Threshold Rebalance: April 2025
Mark Crothers | Mar 13, 2026