If you’re reading the investment headlines in the news around this time of year, then you might start to feel a bit of anxiety around whether your investments are well placed. Reading the news is one thing but acting on it is another.
Take some of these headlines from last week. On Tuesday 4 December, the Sydney Morning Herald published the following headline on its Markets Live page:
So we all slept well that night. But the very next day, things changed radically with the following headline:
Imagine how things would have turned out if you had acted on this information in your own portfolio?
And it’s not just the share market that can dupe you. Speaking in April this year, ANZ senior economist Daniel Gradwell commented on the Sydney residential property market with the following:
“We think most of the slow down has already occurred…auction results in Sydney and Melbourne suggest that the majority of the price growth adjustment is behind us.”
Really? Since April, residential property prices have plummeted. On 1 November 2018 The Guardian ran with the headline:
“Sydney house prices see biggest fall for 30 years.”
The article went on to say that properties in Ryde (Sydney) have declined by over 14% in the past 12 months.
It’s not unknown that many news writers often try to define news as what’s most up-to-date, particularly shocking and attention grabbing. Sensationalised headlines can be used to attract eyeballs and help improve a newspaper’s readership. As a result, more eyeballs generate more advertisers and therefore more dollars.
News coverage undoubtedly serves to inform the community on what’s happening around us. But much of the data they receive is often shaped and molded to produce an emotional reaction and build engagement from the audience.
This can be problematic for long-term investors trying to keep abreast of what’s happening in markets. How is it possible to tell what is genuinely important information on the one hand, and sensationalised click-bait on the other?
Understanding how markets work, how media works and focusing on what you can control is the best way to stay disciplined and true to your investment goals.
Breaking news is often built around prices.
Often by the time you read about an event, the market has changed and is worrying about something else. Markets are transient and quick-changing by nature so be wary of news that deals too much with short-term turbulence.
Attention is the new currency
Media competition is intense, and your attention is their currency so be aware of what the journalist’s motivation might be. 87 years ago, on 18 April 1930, when people all over Britain settled to catch the evening news bulletin, all they heard was ‘There is no news’, followed by piano music in the rest of the 15-minute slot. Nowadays, it’s hard to imagine a slow news day. We live in a world where the focus is often not so much on what is actually happening, but that there is always something happening.
Focus on what you can control
Finally, while there’s nothing wrong with taking an interest in global events, acting impulsively on something you’ve read can be damaging for your long-term goals. Try to accept what you can and can’t control. Mitigate risk by investing in a diversified portfolio that includes international shares, reviewing your portfolio and re-balancing every so often.
Managing your own investments can be difficult, so it’s worth seeking help with an external financial adviser who knows you, understands your risk appetite and are aware of your goals.
All of this is not to undermine or deny the real-life tragedies that are reported in the news, nor ignore the happenings in our world today. Rather, it is a reminder for us to be mindful when headlines jump out at us and staying clear of impulsive decision-making that can damage our long-term goals.
What Can Align Financial Do For You? Visit our homepage to learn more about our service. If you would like to speak to us about your financial circumstance, please feel free to give us a call on 02 9913 9995. We are located in Narrabeen on the Northern Beaches of Sydney.
Disclaimer: This post has been prepared for general information purposes only. It is not specific advice to any particular person. You should consult an authorised Align Financial adviser before making financial decisions. Align Financial | Financial Planner Northern Beaches | Servicing North Narrabeen, Narrabeen, Mona Vale, Elanora Heights, Newport, Avalon, Palm Beach | Enquire with us online.