A lot of financial news is just noise. It can be interesting, sure. It can even be entertaining. But generally, acting on news headlines can be counter-productive for your long-term investment welfare.
In this week’s blog, we look at the role of distractions in investment and what you can do about them.
Smart Investors Ignore News Remember the SARS virus? A little over a decade ago, financial headlines were suggesting the virus threatened a painful reckoning for investors. Now it’s Ebola or something else. As an investor, there’s nothing wrong with keeping up with the news. The problems arise when you trade on headlines.
Keeping Your Portfolio on Track Investors are constantly blindsided by financial news. They are told that such and such a development will have such and such a consequence in the markets. And then something else happens entirely and the predictions go awry. How can you stay on track amid the noise?
Average Returns Versus Average Investors You read a lot in the financial media about the great returns delivered by the market. The problem is many people don’t get those returns. And they fail because they get distracted by noise—buying high, selling low, chasing past returns and not staying diversified.