Trading is like chess, not weightlifting. It's not an endeavor that's won or lost in one day depending how hard you flex your financial muscles. It's a finesse game; it's strategy. So you think and play for position, looking to set up exposures that are likely to unfold slowly over the next six months...not 60 seconds.
So just as the surfer will patiently tread water, waiting for that one perfect wave, the experienced fund manager plays for position, methodically putting himself in the midst of the best possible opportunities, even if it means a few weeks or months of lackluster gains.
The other reason I avoid obsessing about my day-to-day performance is an emotional one. This is a highly competitive game, and just like the guy on a Slim Fast diet who constantly weighs himself, frequent tallying of your daily return is an easy was to get suckered into low probability trades.
So when I see that the S&P 500 is up by 2% for the week and I'm only up by 1.5%, my competitive intuition is to want to "catch up," which usually means trading more aggressively or impulsively straying from my established plan. I get stupid.
Instead of fixating on how many percentage points you're beating or trailing the indexes, focus on your portfolio and how each component is acting under the current market conditions. Not every day is going to be a profitable one, but with a patient, disciplined strategy that looks beyond that week's hot names, you'll usually be well positioned for the substantial moves that unfold over time.
Also, while I know that performance is what matters, constantly evaluating your returns is a surefire way to incite stupid behavior. When facing disappointing results, our hunger to win too often drives us to make poor investment decisions such as trading too aggressively or chasing low-quality trades. You make yourself crazy.
You should most certainly watch your performance, but you shouldn't obsess on it. Successful investing is a marathon, not a sprint. Playing for position and keeping your cool are among the best ways to ensure a successful finish.
