Five (Bad) Reasons You're Worrying About the Markets His sketches are archived on the Bucks blog. One of the most important things to consider when you're investing is the question of when you'll need the money. If you need it next year, you should invest far differently than if you need it 20 years from now. If you're invested in hundreds or thousands of stocks all over the world, and the money is for an event 20 years from now (say, retirement), you can worry less about losing it all. With that kind of diversification, risk becomes in part a function of time. The odds of all the companies in your portfolio going to zero is pretty low. It could happen, but if it did, we're all moving to the hills to grow our own vegetables anyway. We know the market will go up and down in the short term, yet people sometimes worry anyway about that fluctuation even if they don't need the money for 20 years. Here are a few reasons why. You're not confident in your investment process. If your portfolio is based on a thoughtful approach that relies on the best academic evidence we have, then it can be easier to stick with the long-term plan when things get scary in the short term. On the other hand, if what you own is a collection of random mutual funds instead of a well-designed, broadly diversified portfolio, it's easy to get spooked. You start to wonder if the reason you're losing money has something to do with the investment instead of just the normal ups and downs of the market. You're watching too much news. Counteracting this one is simple, but not easy. Turn it off! Go on a media fast. If you're confident in your investment process, what does the daily news about the markets do for you? Either ignore it, or get really clear about why you're tuning in. Is it to be informed so you can have an intelligent conversation at dinner parties? Is it because you find it funny? I have a friend who refers to the Money section of USA Today as the "Funny" section. Whatever your reason for watching or following the news, just make sure you're clear about it. If you're watching out of habit, and it makes you anxious, just stop it! You're listening to people with different time frames than yours. Josh Brown recently posted this helpful reminder on his site, The Reformed Broker: Everyone has an opinion and there is a lot of smart stuff being said for long-term investors, short-term swing traders and day traders out in the Wide World of Market Punditry - but the trick is not just figuring out who's right, it's determining whether or not something is relevant to your time frame. If you're an actual investor, and not a short-term trader, make sure the information you're worrying about matches your time horizon. If you're investing to pay for your kids" educations 12 years from now, why do you care (at all!) about the latest apocalypse du jour? You're projecting the recent past into the future...forever. This is a classic mistake, and one that is really easy to make. We are pattern-seeking animals and are notorious for looking at the recent past and thinking that it will last forever. We did it with tech stocks in the late 1990s, real estate in 2005 and now we're just positive the European debt crisis will never, ever end. But it will. Remember, things change. You think we're all moving to the hills to grow our own vegetables no matter what we do. I can't help with this one. Until I learn differently, I still believe it's in our best interest to be invested in a broadly diversified portfolio since capitalism as we know it will not fall apart anytime soon. Your timeline is your own. Not your neighbors," your co-workers" or your brother-in-law's. So do yourself a favor and make investing decisions based on what your time frame requires and not what the talking heads on TV are saying to fill a 24-hour news cycle. You'll sleep better and will hopefully feel a bit less like running to the hills.