One of the main obstacles to long term financial success is 24 hour news. The more you stay tuned, the more likely you are to take action that is contrary to your long term goals. Since our clients are generally well educated, successful individuals, most believe that they can’t be easily swayed by short term news. We all can and the first step towards avoiding missteps is to recognize the danger.
Most brokerage firm offices and many of their websites contain streaming news alongside the streaming stock market ticker. Both are mortal enemies of long term investors. The stock market in the short term is a random numbers generator, responding to every twitch and tweet in available information. Noise is just noise, nothing more.
The recent “Greece Crisis” is an excellent case in point. The pertinent question is not about the news event itself but rather about how you behave, what you should do in the face of this news. Sometimes, investors are tempted to move to the “safety of the sidelines” when this is usually counter to the goal of accumulating and maintaining wealth.
The real antidote to being all consumed by day to day news is to maintain a well diversified global portfolio and to ignore the temptation to “dip and dart” in and out of the stock market. This video from Weston Wellington at Dimensional is a good primer. Remember, investing is …more than numbers. Ready for a real conversation?