How Often Should You Check Markets?

India has seen a significant rise in retail participation in Indian stock markets. As per an SBI report, nearly 44.7 lakh retail investor accounts were added in 2021. As of 2020, individual investors in the country contributed nearly 45% to the total stock exchange turnover in the country. As more and more people are joining the wealth creation race through stock markets, there is also a surge in the constant stock market monitoring among individual investors.

Experts observe various reasons including lack of market knowledge, panic due to volatility, better control, etc behind constant market monitoring by investors. But is this the right approach? Should investors look at the markets hourly, daily, or weekly? How often should you check the markets? 

Here, we will explain the right frequency for market monitoring that can be adopted by investors depending on their investment styles. Let’s begin by understanding the rationale behind market monitoring.

Why monitor the markets?

Every investor who has invested in the stock markets or in avenues that are influenced by the stock market performance must monitor the market movement. This will aid in portfolio monitoring to ensure responsible investment and take away unwanted stress about market volatility. 

Seasoned investors often check the stock fundamentals and technicals before taking an investment decision. If entry and exit points are decided based on these, the overall impact of market volatility can be limited.

Right frequency of stock market monitoring

Now, coming to the question of how often should you check the markets. Like every decision in the financial world, the answer to this also depends on the type of investment being made and the investment approach of the investor. 

1. Approach of value investors

Value investors generally invest for longer horizons of over 5 years. They pick up undervalued stocks that showcase strong fundamentals and brighter growth prospects. These stocks, however, show positive performance after a few years and may take even longer to reach the targeted valuation. So, it makes sense for value investors to check on the markets and prices of their invested stocks in quarterly time periods instead of checking them every couple of weeks.

2. Approach of income investors

Income investors focus on holding periods that may be even longer than value investors. Such investors aim for dividend income from the stocks or mutual funds that they would have invested in. Companies may declare dividends once or twice a year, depending on their performance. Therefore, income investors are better off looking at the markets once or twice a year to gauge the company’s performance traction and overall market scenario.

3. Approach of growth investors

With growth investors, the focus is on buying low and selling high. Such investors are constantly on the move as they look to tap onto rapid price appreciations in stocks. Growth investors profit from higher short-term market volatility as they seek higher returns while accepting a higher risk appetite.

Since increased volatility means enhanced and frequent attention, such investors have to constantly monitor the markets depending on their purchasing style. For instance:

1. Day traders have to look at the markets throughout market hours.
2. Swing traders must look at the markets daily, if not hourly.

What factors determine frequency of checking the market ?

If investors are unable to categorise themselves into any of the above-mentioned investment style baskets, they can consider the following factors to understand how frequently they must check the markets:

1. Earnings season

Earnings season is the timeline around which most companies declare their quarterly or yearly earnings. This timeline increases the possibility of larger price movements. Therefore, short-term and medium-term investors must watch the market reaction to earnings news. 

2. Global geopolitical scenarios

The Russia-Ukraine war has had a severe impact on stock markets. The resulting rise in global fuel prices has further triggered inflationary conditions in many economies. The economic losses resulting from the Covid-19 pandemic have also given rise to recession-like scenarios in major economies like the US. Such events can impact growth investors who are looking for short-term gains. Therefore, as these conditions arise, it may be wise for certain types of investors to keep a close watch on the markets.

3. Entry or exit points

When an investor has just entered a stock or any other stock-market-related investment, there is maximum exposure to risk in the initial period. So, investors should check market conditions more frequently than others while putting their money to work. Keeping a close eye on external forces along with market movements can help investors arrive at the right entry or exit points in the market. 

Conclusion

Many investors are often tempted to look at their investments as soon as there is a big fluctuation in the market. However, looking at the markets every day can make investors more susceptible to hasty decisions that can cause losses. 

Today, as stock market investing is more accessible than ever, investors may be better off sticking to the good old rule which goes as – “As long as your investment strategy is in place, you must simply trust the process and opt for a bird’s-eye view of stock investments.” 

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