Private Investor's Diary: Swapping the North Sea for copper

While I was away in Peru exploring the Amazon and hiking the Inca trail to Machu Pichu, I was happily unaware of the wild swings in the markets. The most dramatic was the 20 per cent fall in the Nikkei 225 over the first few days of August, before it recovered it all over the remainder of the month. Ignorance is bliss. There is a serious point, though – watching the market too closely can harm your health. History shows that the S&P 500 is up only 53 per cent of days and down 47 per cent of days. However, when you look to see how your investments are faring, you never hope to find that they are down – you expect them to be up. So, the down days cause far more disappointment than the up days give pleasure. After all, that is what you wish for when you log in.

Checking every week gives a better outcome, with the market up 58 per cent of the time, and better still, checking once a month gives a 63 per cent chance that it will be up. If you checked only at the end of each year, you would be disappointed only 25 per cent of the time but could console yourself that, over the past five years, you were most probably up. The market has given negative returns over rolling five-year periods only 10 per cent of the time.

I give in to the temptation of looking at the market too often, but then again, I am publishing my investment diary. Looking at your portfolio too often can lead to overtrading. It’s telling that a study by investment manager Fidelity into client accounts revealed that the best performing ones were those where the client had died. I am probably as guilty as anyone of trading too often. Cutting a position, probably at the wrong time, or taking profits becomes too tempting. I'm resisting doing that with Serica Energy (SQZ), but more on that later. All this preamble is my way of saying how lovely it was to be out of internet contact for eight days while on holiday, probably for the first time since the smartphone era began.