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

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