The Less I Know the Better: How Over-Monitoring Your Investments Sabotages Your Success​

​Tame Impala’s hit “The Less I Know the Better” (2015) captures the bittersweet realization that when it comes to love, sometimes, knowing less spares us heartache. While the song tells a story of romantic disillusionment, the core message (that too much information can be emotionally damaging), is not singular to a broken heart. It can apply just as powerfully to investing. The more we look, the more we hurt.

In the age of 24/7 access to market data, performance dashboards, and trading apps that buzz in your pocket, it's easier than ever to keep tabs on your portfolio. And while staying informed can feel responsible, it may be quietly sabotaging your long-term success.
​
My argument: sometimes, ignorance really is bliss.

 
How over-monitoring affects the brain

Behavioral economists Richard Thaler and Shlomo Benartzi gave us a term that perfectly describes a common reaction to over-monitoring of investment accounts: myopic loss aversion. It’s the tendency to feel the pain of short-term losses more intensely than the pleasure of equivalent gains¹. When investors check their accounts daily, they expose themselves to volatility that’s usually just noise. Emotionally, however, that red ink feels like real danger.

A recent Betterment study found that checking your portfolio quarterly instead of daily reduces the chance of seeing a moderate loss from about 25% to just 12%². That seemingly small difference can reduce the number of emotional triggers in half. More checking = more perceived losses, even when the long-term trend is upward.

Thaler’s research shows that daily checkers experience close to a 50/50 split between gains and losses. Because losses loom larger on the mind than gains, the emotional experience of investing becomes negatively skewed¹. But the less frequently you check, the better the ride. Quarterly checkers often feel neutral to mildly optimistic. Annual checkers? They report positive sentiment. 

Monitoring and Comparisons Fuel Poor Choices

Think about what else we’re seeing when we check the performance dashboard: market news and the leaderboard. Maybe our accounts are down for the day, but you know what’s not? Nvidia. Microsoft. Meta. Amazon.

That quickly turns into:
“Why is my account down when everyone else seems to be making money?”

Then comes the callback to a conversation with a friend:
“Joe says he and Anne hold all their money in just five tech stocks, and their account has averaged more than 20% returns for years.”

Which inevitably leads to the conclusion:
“I must be doing this wrong. I need to be more aggressive positioned like they are.”

This pattern is a classic example of social comparison theory, and in investing, it leads to FOMO (fear of missing out) and reactionary trades. Research shows that when investors are exposed to peer performance or discussion, they’re more likely to deviate from their plan, even if their own portfolio is performing perfectly on-target³.

The more we monitor, the more we compare. And comparison is the thief of a sound long-term plan.
 
Overtrading: Activity That Hurts

Think about the last time someone got under your skin. How did you respond? For me, it was during a beach volleyball match not long ago. After some tight calls didn’t go my way, I let the frustration seep out through muttered comments and some pretty unsubtle body language. The result? I played worse, lost focus, and we ended up losing the match. Emotion got the better of me.

These same types of mistakes commonly occur in the investing world. When we're emotionally rattled, we're more likely to do something… rash. Overtrading (i.e. selling low, buying high, chasing trends, or retreating to cash) is often a behavioral pitfall fueled by too much information.
Investors often think that this time they need to act. That this time is different. Yet history and experience show it’s not market losses, but our emotional responses to them, that inflict the most lasting harm.

Over the past 20 years, the average equity investor has lagged the S&P 500 by nearly 3 to 4 percent per year, according to DALBAR⁴. This wasn’t because they picked the wrong investments, but because they bought and sold at the wrong times, often in response to fear rather than fundamentals.
 
A Better Practice: Set It and Check It (Later)

If you’ve built a solid plan and diversified your portfolio, then your biggest threat isn’t market turbulence, it’s your reactions to it. The solution? Check less. Feel better. Perform better.

For most people, I recommend checking no more than quarterly. Better yet, automate your contributions, determine a reasonable asset allocation, and log off. Let time do the heavy lifting.

In investing, as in life, sometimes… the less you know the better.


More Reading:
The Subscription Trap: How Consumer Psychology Is Quietly Sabotaging Your Financial Plan
The Wealth Building Power of Forced Saving
When It Comes To Money, It Pays To Keep Things Simple

​______________________________________________________
​
​References
¹Thaler, R. H., & Benartzi, S. (1997). Myopic loss aversion and the equity premium puzzle. The Quarterly Journal of Economics, 112(1), 73–92. https://doi.org/10.1162/003355397555226

²Isola, A. (2019, October 28). Warning! Frequently checking kid’s grades or your portfolio is bad for your health and wealth. A Teachable Moment. Retrieved from https://tonyisola.com/2019/10/warning-frequently-checking-grades-or-portfolios-is-bad-for-your-health-and-wealth/

³Bursztyn, L., Ederer, F., Ferman, B., & Yuchtman, N. (2014). Understanding peer effects in financial decisions: Evidence from a field experiment. Econometrica, 82(4), 1273–1301.
​
⁴DALBAR. (2022). Quantitative Analysis of Investor Behavior (QAIB). https://www.qaib.com/

Return to Blog