I can’t always articulate what I’m thinking as clearly as I’d like, but I know when someone else does:
Stocks don’t make new highs every single day, so most of the time you’re going to be underwater from your portfolio’s high water mark. This means there are plenty of chances to be in a state of regret when investing in stocks.
This makes sense when you consider that stocks are positive just a little over half the time when looking at returns on a daily basis, but it can be difficult to wrap your head around this fact.
Being in a ‘state of regret’ is not helpful for building (or reinforcing) healthy wealth-building habits. This is why it’s important to measure something other than “portfolio value”. It’s perfectly normal to be “down from highs” (emotionally, and financially) and measuring something else not just a math trick to keep investors sticking to their plans.
Curious about what to measure and how it’ll help you build sustainable wealth? Yeah, there’s a book for that.