When I first started building a portfolio of FTSE shares, I used to check how it was doing all the time. Seriously. I’m talking, three or four times a day, five days a week. That seems incredible to me today. Now I barely glance at it.
That doesn’t mean I’m bored with my portfolio. Nor does it mean that I’m no longer relying on it for my retirement income, because I am. I just believe that repeatedly checking up my FTSE shares does more harm than good.
Short-term moves don’t matter
I learned my lesson after buying UK tech star ARM Holdings, some 15 years ago or so. Now that stock pick sorely disappointed me. I kept checking its share price, day after day, waiting for it to take off. It never did. So I sold it. After three months. For me, that felt like an eternity. The next few years felt a lot longer, though, as ARM’s share price rocketed by 500% or more. I missed out on that, through my impatience.
I had learned my lesson, though. To build long-term wealth from FTSE shares, I have to give them a bit of time. Three months is certainly not enough. Since then, I’ve drunk deep on the Fool philosophy.
Now I only buy FTSE shares that I intend to hold for a minimum of five years, and ideally decades. As a result, I take a bit more time over selecting stocks. I look for companies with loyal customers, steady revenues, reliable dividends, and a strong defensive “moat” against existing rivals and mould-breaking start-ups.
As inflation picks up, I’ve started looking for stocks with pricing power, too, which allows them to pass on rising costs to customers. Once I’ve bought one or two FTSE 100 shares, I let them get on with it. The last thing I want to do is check on them day in, day out, fretting over every up and down, and repeating the ARM debacle.
My FTSE shares can take care of themselves
I don’t abandon my portfolio completely. I like to check that the original investment case still stands. For example, if I bought a company to deliver long-term dividend income growth, I will make sure management policy remains progressive. If I bought a dirt-cheap UK stock in the hope that its share price would recover, I would want to see progress towards that goal. Otherwise I could risk sitting in a value trap for years.
I will also check that my portfolio of FTSE shares still has the right balance. So if I held a couple of shares in one sector that went gangbusters, I might shift some of my profits into an underperforming sector.
I never, ever check up on my FTSE 100 shares during a stock market crash. Firstly, it hurts. Second, it might tempt me to sell. That’s never a good idea, as it would crystallise my short-term losses and lock me out of the recovery. So by and large, I leave them to it. Here’s hoping ignorance is bliss.