“News is to the mind what sugar is to the body.” – Rolf Dobelli
We live in a world of news and media. We are constantly bombarded by headlines, articles, stories and breaking news updates. The media encourages us to fixate on one issue from so many angles that we tend to get dizzy and lose sight of the main point. And when the going gets tough…the media gets ugly!
Take for example, the Apple earnings release from the fourth quarter of 2012. According to Apple, their Q4 results were aligned with their company’s expectations. However, according to what “Wall Street Analysts”were expecting, Apple’s revenue fell short by $2 billion in the last quarter of 2012. This led to countless headlines questioning Apple’s products and their ability to sustain dominance in the mobile device market. As a result, Apple shares fell 12.5% in one day.
Did their business change? No. Did their devices change? No. Did their corporate structure, strategy, leadership, or competitors change? No, no, no and no.
Then what did change?—Headlines!
Now this is just one example the effect news media can have on investors. Any one story can be twisted to instill fear and doubt in the minds of millions!
The quote above is by a Swiss author from his article called, “Avoid News,” which essentially describes news as manipulative, inhibiting, costly, and irrelevant. Now I’m not saying every story out there is “toxic” and to absorb news is detrimental, but there is value in limiting news “intake” and understanding what should and should not be absorbed.
So next time the news is on, remember these points:
If a little is good, a lot isn’t better
In everyday life, constant intake of news is overwhelming. In the financial markets, over-saturation of news often leads investors in and out of the markets, usually at the wrong times. We find there is so much noise that it can cause investors’ confidence to diminish, leading them to stray from their investment plan. So when it come absorbing news, try to take smaller bites.
Dig for the facts
The truth isn’t in a 2 page article or a 30-second story. Those headlines are littered with the buzzwords to grab readers and stop channel surfers. To find the facts requires a little digging. Don’t read what’s topical today. Research the topic and increase your understanding. Gather enough facts to form your own opinion. Loud headlines inhibit independent thinking. Instead, try reading books or journals.
Look past the present
News is stagnant. Think about it; most reports are out of date days or even hours after they’re published. People want to know what’s happening now, even though it will be “old news” tomorrow. Don’t let today’s news impact tomorrow’s behavior. Instead, read with a long-term perspective in mind, and understand that the lasting facts don’t change because the paper is off the press.
As advisors we try to filter out what’s important and not important. We spend our time reading, researching, and filtering through analysis to find the long-standing facts that are appropriate to each individual and their specific plan. Because when the world gets noisy and news-y, we want to provide the clarity and confidence that keeps your plan on the right track.
John started his investment career in 2012 after graduating from Colorado State University with a bachelor’s degree in Financial Planning. His desire is to provide care and guidance for individuals and families through all aspects of their financial life. Learn more about John here.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.
Securities and Advisory Services offered through LPL Financial. Member FINRA/SIPC.
Sources: http://dobelli.com/wp-content/uploads/2010/08/Avoid_News_Part1_TEXT.pdf/by John Booren
https://prosperion.us/wp-content/uploads/2013/02/make_the_media_work_for_you.png424759John Boorenhttps://prosperion.us/wp-content/uploads/2017/02/whitelogosized.pngJohn Booren2013-02-05 19:23:102017-03-31 13:44:22Make the Media Work for You
As financial advisors we’re constantly advocating for investors to maintain a long-term view. We consider it to be fundamental, not only as an example of good investor behavior, but as a way of minimizing the emotional toll of “riding the rollercoaster”.
But what does it mean to have a long-term perspective? How long is long enough?