I’ve posted Entry #591 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Size of an Investor’s Stock Portfolio Tells Him How Well He Has Done with His Life.
Juicy Excerpt: There’s something else at play. That something else is the feeling of well-being that a high portfolio value provides us re the level of success we have achieved in living our lives. We all want to know that we have made good decisions, that we have done well. There are a variety of signifiers that we look to for reassurance that this is the case. We take comfort in having family members and friends who admire us and in obtaining promotions in our career and having the material possessions (a house, a nice car) that send a message to the world that “this person has overcome the obstacles that all people face in life and has made something of himself or herself.”
The higher the balance, the better they should feel as they can offset a downturn better than someone with a small balance or no balance in their portfolio. This is not rocket science. The person who built a high portfolio balance is smart enough to make adjustments to protect themselves during times of adversity. This person likely has cash reserves, insurance, etc to handle what is thrown at them. People with small portfolios can not do this.
Investors are better off knowing the true size of their stock portfolios. I am not able to imagine how there could ever be s single exception to that general rule.
Rob
We know the size of our portfolio, you are just jealous.
Do you believe that irrational exuberance is a real thing, Anonymous?
Rob