Turn Down For What? Ignoring The Noise

Financial media is like all media, there is a lot of it and it comes at you from all angles. Your laptop, phone, TV, there's no escape.

"Beyond Meat is rocketing to the moon, get in before it's too late!"

"Household debt is out of control, the next crisis is coming. Sell now!"

Endless "experts" looking into their crystal balls, pushing their opinions and presenting them as facts. No one knows the future. If they did, they wouldn't be broadcasting it. A poker player doesn't announce their cards to the table. Real information is kept to themselves to profit.

Be skeptical of financial fortune-tellers - or any fortune-teller for that matter. They're likely acting out of self-interest, promoting their own strategy or baiting for clicks.

Rational minds acknowledge that markets are unpredictable and the future is unknown (crazy, right?).

Despite the uncertainty of markets, decades of data demonstrate it trends up over time. You can capture the long-term growth of markets by simply investing in low-cost ETFs.

Business come and go, economies rise and fall. Through it all (wars, depressions, crises), markets persist and rise. Businesses continue on, becoming more innovative, competitive and efficient.

When you invest in the total market, you're betting that businesses (in aggregate) will thrive in the long-term. There's no guarantee but if somehow markets fail permanently, there are bigger concerns than your portfolio.

It's natural to want to act when you read headlines, action gives you a sense of control. But you're more likely to drag down your performance by tinkering.

In 2009, Berkley studied the trading activity of 70,000 households and found the 20% most active investors did 7% worst than the average.

More action is not better. If you have a solid investment strategy (i.e. a good savings rate and a low-cost diversified portfolio), it's better to tune out the noise, stick to the plan and get out of your own way.

“As hard as it may be to do so, smart investors know that the key to success is ignoring the daily noise of the markets.” – Larry Swedroe

Comments

The Art of Giving Feedback

Constructive feedback is an awkward affair. You don't want hurt feelings, but recognize the importance of honesty. You've tried the classic "hoping things will get better on its own" and unfortunately it hasn't played out. When giving feedback, here are a few things that I try to keep it mind. Start with empathy. Step into their shoes and understand their story. If you don't know, ask. Be genuinely curious. Feedback is a dynamic affair. Shared communication with a shared goal towards progress. Take the emotion out of it. Focus on the situation, not the person. Focusing on the person adds unnecessary weight to an already emotionally-bloated event. Be specific. Give clear examples. Vague feedback equals dismissed feedback. Doing above won't de-awkward things fully, but it will dampen it and increase the chance of better outcomes.

Today's Special: Humble Pie

You champion a project, fight for an idea, and then...reality sets in. That churning in your stomach isn't butterflies, it's the realization you've missed the mark. Pride will puff up your chest, and kick in the "defend at all costs" instinct. But arguing with the umpire never changed a call. Admitting you're wrong isn't a sign of weakness. It can strengthen your professional standing. In a world obsessed with the illusion of infallibility, the courage to adjust course is a breath of fresh air. It shows you're confident enough to be wrong, and adaptable enough to learn from it. Do your research, think critically, and stand behind your decisions. But when the data whispers (or screams) otherwise, don't be afraid to swallow that slice of humble pie. Be the first to acknowledge. Don't wait for someone to point out your mistake. Be open, take responsibility, and most importantly, focus on what you're going to do to address it. Don't dwell ...

Negative Feedback, Positive Lessons

In the battle against plastic bags, a five-cent tax was shown to be much more successful at deterring usage than a five-cent credit for bringing your own bags. Carrots satisfy but sticks sting, and they sting hard. So we default to the less painful choice of avoiding loss. Loss aversion impacts the way we process information. A 2019 study invited participants to learn through a series of multiple choice questions. Each question only had two options to choose from. Whether guessing correctly or not, they would still learn the right answer. Despite the identical learning opportunity, participants were much more successful at recalling the answers they guessed correctly than those they got wrong. "You're right!" feels good. We savour the moment, analyzing every detail. "You're wrong!" stings. We want to quickly forget, dismiss, and move on. When we succumb to loss aversion, we miss opportunities to learn. Failure is part of the process. We'll experie...

Herman Ye

Search