The Misery in Measuring
Source: "By Height" scene, Harold Ramis, Caddy Shack, 1980, 00:17:02
In the movie Caddyshack, the unflappable Ty Webb (Chevy Chase) is asked how he measures himself against other golfers. He responds dryly: “By height.” Absurd? Yes. Insightful? Also yes. For Ty, measurement is about perspective, not pressure. In sharp contrast stands the insecure and overly anxious Judge Smails (Ted Knight), who is triggered by every comment, event, and interaction. Their opposing views serve as a reminder that what we choose to measure, how we measure and how often we measure profoundly shape how we view the world.
This holds true in science, business, personal well-being, and especially investing. Focus too narrowly or check too frequently, and you risk losing sight of the bigger picture. In volatile markets, this tendency is magnified by a constant stream of breaking news, headlines, and alerts—all of which can leave you feeling like you should be doing something, or worse, that you’re doing something wrong.
Speaking of doing something wrong, one of the more destructive behaviors in investing is Myopic loss aversion. This occurs when investors take a view of their investments that is strongly focused on the short term, leading them to react too negatively to recent losses, which may be at the expense of long-term benefits (Thaler et al., 1997). This phenomenon is influenced by narrow framing, which is the result of investors considering specific investments without taking into account the bigger picture (Kahneman & Lovallo, 1993). A large-scale field experiment has shown that individuals who receive information about investment performance too frequently tend to underinvest in riskier assets, losing out on the potential for better long-term gains (Larson et al., 2016).
Source: Carl Richards' Volume 1: Behavior Gap
Observation Overdrive
Take April 2025. Markets see-sawed all month—tech led a sharp decline fueled by interest rate fears, tariffs, tweetstorms, and geopolitical noise. Then came an equally abrupt rally. Headlines whiplashed from “Recession!” to “Recovery!” within days. And by month’s end? Markets ended roughly where they started—as if none of it happened.
Source: YCharts
The Longer the View, the Calmer the Waters
Zoom out, and everything gets a little clearer. What looks like chaos on a one-week chart is a mere blip over a multi-year view. If you're investing for retirement, legacy, or generational wealth, your perspective should stretch far beyond a bad week—or even a bad year.
The charts below illustrate the 10-year performance of the S&P 500 from January 1, 2015, to December 31, 2024, shown across three different timeframes: daily, quarterly, and annually. While the time period and overall returns remain the same, the only difference is the frequency of measurement. Daily returns look the most volatile, quarterly less so, and the annual view appears pretty smooth. Agree?
Source: S&P Dow Jones Indices LLC via FRED | fred.stlouisfed.org
So choose carefully what you measure—and how often. Too much measurement distorts reality. Too much watching invites emotion. And unchecked emotion is one of the greatest threats to long-term investment success.
Source: Carl Richards' Volume 1: Behavior Gap
Markets will always move. The real question is: Will you? Or will you stick with a plan built to endure?
Principle Wealth
