Look Beyond the Headlines (Key Investing Principle #9 of 10)

By Jeffrey Meenes, CFP® (Published Date March 23, 2023)

The U.S. stock market has been an engine for wealth creation throughout the past century. This is especially true when investors are mindful of how markets work, what strategies deliver success, and what not to pay attention to. 

How exactly can a successful investor approach the markets? In this blog tip series, we highlight ten principles an investor can follow to create a better investing experience and generate consistent returns over time.

Key Investing Principle #9 to Improve Your Odds of Investing Success: Look Beyond the Headlines

Investment discipline can be challenged by daily market news and commentary, which can generate anxiety about the future or tempt investors to follow the latest investment fad. 

It’s important to consider the source of information and maintain a long-term perspective when making investment decisions. The media tends to focus on bad news because it sells more than good news, but this can lead investors to make emotional decisions based on news that is already built into market prices. It is not a reliable investment strategy to try to profit from the news by anticipating how the market will react. 

Instead, investors can use the information already reflected in prices to build diverse portfolios based on the dimensions that drive higher expected returns. A sound investment strategy involves accepting that markets work, understanding the relationship between risk and return, diversifying, keeping costs low, and maintaining a long-term perspective. It is recommended to turn off news channels that may cause unnecessary anxiety and focus on a long-term approach to investing.

To improve your investment experience, it's important to focus on what you can control. One way to do this is by working with a qualified financial adviser who can help you develop an investment strategy tailored to your financial goals for you, your family, and your retirement plan. An adviser can provide valuable expertise and guidance to help you take actions that add value. This approach can lead to a more positive investment experience.