Why are retail investors advised against frequently checking the market?

Why Is It Advised for Ordinary Investors Not to Check Market Conditions Frequently?

Frequent monitoring of market conditions may negatively impact the decision-making of ordinary investors, particularly from the perspectives of Warren Buffett's investment philosophy and behavioral finance. The rationale behind this recommendation is explained through several key angles:

1. Avoiding Emotional Decision-Making (Behavioral Finance Perspective)

• Short-term market fluctuations are often volatile. Constant checking can trigger fear or greed. For instance, a temporary stock decline may lead to panic selling due to "loss aversion" bias, while price surges might prompt impulsive buying at peaks.
• Buffett emphasizes in his shareholder letters that investments should be based on rational analysis, not emotion. Obsessively tracking prices amplifies psychological biases, undermining long-term investment principles.

2. Focusing on Long-Term Value Over Short-Term Volatility (Buffett Investment Strategy)

• Buffett views the stock market as a "voting machine" (short-term) and a "weighing machine" (long-term). Short-term prices reflect market sentiment, not a company’s intrinsic value. Ordinary investors should prioritize fundamentals (e.g., profitability, management) over daily price movements.
• His advice is to "buy and hold," exemplified by Berkshire Hathaway’s long-term holding strategy. Frequent market checks distract from recognizing sustained growth potential.

3. Reducing Transaction Costs and Tax Burdens (Personal Investment Practice)

• Frequent trading increases commissions, slippage costs, and capital gains taxes, eroding returns. Buffett notes that patiently holding quality assets enables compounding growth, while short-term trading often backfires.
• For example, daily market monitoring may tempt investors to adjust positions over minor fluctuations, accumulating high costs that ultimately reduce net gains.

4. Enhancing Investment Discipline and Patience (Long-Term Principles)

• Buffett repeatedly states in shareholder letters that successful investing requires the right "temperament"—ignoring noise and adhering to strategy. Constant market watching acts as "noise interference," weakening discipline.
• Behavioral finance research shows that reducing information exposure (e.g., avoiding market checks) helps investors evade "overconfidence" or "herd mentality," enabling better execution of long-term plans.

In summary, Buffett advises ordinary investors to treat holdings like business ownership: acquire quality companies and "forget" them, allowing long-term appreciation. Practically, this means scheduling periodic reviews (e.g., quarterly or annually) rather than daily monitoring to achieve more stable returns.