“If you don’t have a good plan, then what the hell are you doing? The market is inhabited by sharks who eat people with no plans or who abandon their plans under anxiety.” – Phil Pearlman
Markets certainly have been wildly volatile this year. Dow up 300 one day, down 300 the next. I read recently that the Dow has moved over 14,000 points in the last few months and has essentially gone nowhere, which is really something (and quite exhausting!). Year to date, US stock markets are down about 5% and most international markets are down over 15%. Certainly a tough year for investors.
Markets like this one remind us of how crucial it is to have a well-defined plan in place. It’s important for us to be prepared for bad things happening. (Likewise, preparation for good things that happen is crucial too!) Ad hoc investment schemes simply don’t work. Investing well requires hard work and discipline.
(Those who invest without a plan usually end up doing things like this!)
The Financial News Media Is Toxic…..Avoid At All Costs
At times like these, it is human nature to seek information and guidance. Unfortunately, that sometimes comes our way via the financial news media.
Here’s why watching the financial news will not help you:
They are incented to scare you or make you feel euphoric. Television marketers know that you will not watch if it is boring. Scary markets are perfect opportunities to increase viewership.
Sound bites do not educate you. The economy and markets are complex beasts and television is not an appropriate forum to learn about them. There are many good books and blogs you can read that can help you become a better investor.
Their guests are there to sell, not help you. Most of the guests are selling something, also know as “talking their book”.
Most of the time there is no newsworthy reason for market movements. From Felix Salmon:
“Market reports should not be an everyday staple of news coverage. Sometimes, occasionally, there are stories in the markets. And then those stories can be reported. But when there aren’t any stories, there’s no point in trying to invent them. And so the daily report — let alone the intra-day report — is at heart a stupid piece of journalism. Some are better than others, to be sure. But none of them are any good. “
You are drinking water from a fire hose. There is some much information out there that watching the financial news typically causes one to lose sight of the big picture.
It is short term focused. Investing is a long term endeavor. Watching financial news may cause you to become short term focused and do the opposite of what is in your best interest.
The best thing to do in times like these is to stick to your discipline, ignore what the media is selling by turning off the TV, and try to take advantage of the situation.
You May Be Interested In
Last time I mentioned that it might be a good idea to improve your password if the ones you use are weak. Here is a good article about bad passwords. I hope you have good strong passwords in place. It’s one of the best ways to protect yourself from identity theft.
Have a very special Thanksgiving!
***************************************
Please note: This commentary is for informational use only. It is not recommended as investment advice. Seek the advice of a qualified investment advisor before making any investment.
Michael McGinley, CFP® is principal of McGinley Financial Advisory, LLC. Comments and questions are welcome.
McGinley Financial Advisory, LLC (“MFA”) is a registered investment adviser located in Peoria, AZ. Access to this website is provided for informational purposes only and without any warranties, expressed or implied, regarding the accuracy, completeness, timeliness, or results obtained from any information presented. Past performance is never a guarantee of future results and information contained in this newsletter is not meant to predict future performance.
For Clients: Please contact McGinley Financial Advisory, LLC if there are any changes in your financial situation or investment objectives or if you wish to add or to modify any reasonable restrictions to the management of your account. Our current disclosure statement, as set forth on Part II of ADV, is available for review upon your request.
What is your investment management discipline?
Markets certainly have been wildly volatile this year. Dow up 300 one day, down 300 the next. I read recently that the Dow has moved over 14,000 points in the last few months and has essentially gone nowhere, which is really something (and quite exhausting!). Year to date, US stock markets are down about 5% and most international markets are down over 15%. Certainly a tough year for investors.
Markets like this one remind us of how crucial it is to have a well-defined plan in place. It’s important for us to be prepared for bad things happening. (Likewise, preparation for good things that happen is crucial too!) Ad hoc investment schemes simply don’t work. Investing well requires hard work and discipline.
(Those who invest without a plan usually end up doing things like this!)
The Financial News Media Is Toxic…..Avoid At All Costs
At times like these, it is human nature to seek information and guidance. Unfortunately, that sometimes comes our way via the financial news media.
Here’s why watching the financial news will not help you:
They are incented to scare you or make you feel euphoric. Television marketers know that you will not watch if it is boring. Scary markets are perfect opportunities to increase viewership.
Sound bites do not educate you. The economy and markets are complex beasts and television is not an appropriate forum to learn about them. There are many good books and blogs you can read that can help you become a better investor.
Their guests are there to sell, not help you. Most of the guests are selling something, also know as “talking their book”.
Most of the time there is no newsworthy reason for market movements. From Felix Salmon:
“Market reports should not be an everyday staple of news coverage. Sometimes, occasionally, there are stories in the markets. And then those stories can be reported. But when there aren’t any stories, there’s no point in trying to invent them. And so the daily report — let alone the intra-day report — is at heart a stupid piece of journalism. Some are better than others, to be sure. But none of them are any good. “
You are drinking water from a fire hose. There is some much information out there that watching the financial news typically causes one to lose sight of the big picture.
It is short term focused. Investing is a long term endeavor. Watching financial news may cause you to become short term focused and do the opposite of what is in your best interest.
The best thing to do in times like these is to stick to your discipline, ignore what the media is selling by turning off the TV, and try to take advantage of the situation.
You May Be Interested In
Last time I mentioned that it might be a good idea to improve your password if the ones you use are weak. Here is a good article about bad passwords. I hope you have good strong passwords in place. It’s one of the best ways to protect yourself from identity theft.
Have a very special Thanksgiving!
***************************************
Please note: This commentary is for informational use only. It is not recommended as investment advice. Seek the advice of a qualified investment advisor before making any investment.
Michael McGinley, CFP® is principal of McGinley Financial Advisory, LLC. Comments and questions are welcome.
McGinley Financial Advisory, LLC (“MFA”) is a registered investment adviser located in Peoria, AZ. Access to this website is provided for informational purposes only and without any warranties, expressed or implied, regarding the accuracy, completeness, timeliness, or results obtained from any information presented. Past performance is never a guarantee of future results and information contained in this newsletter is not meant to predict future performance.
For Clients: Please contact McGinley Financial Advisory, LLC if there are any changes in your financial situation or investment objectives or if you wish to add or to modify any reasonable restrictions to the management of your account. Our current disclosure statement, as set forth on Part II of ADV, is available for review upon your request.