January 4, 2016

Investment Noise

There’s a reason that investors tend to only hear about “looming” market doom or “imminent” market growth. While many news outlets have incentive to draw viewer attention with wildly bullish or bearish predictions, these sensationalized views may be a distraction to a sound investment approach. When tempted to make a radical change to your investment portfolio based on these headlines, it is important to recall some basic fundamentals to keep your plan on track.

Drown out the noise. Market movements are notoriously difficult to predict. The media outlets that scream the loudest are not always the most accurate. The fallout from attempting to time the market in response to one of these predictions can be dangerous to your portfolio.

Look, but don’t stare. While it’s important for you to know the performance of your accounts, short-term market fluctuations can be quite volatile. While the probability of realizing a loss within any given day is high, the likelihood of realizing a loss historically decreases with time. Periodic review of your investment portfolio is necessary, but you shouldn’t let short-term swings affect your view of the future.

Stay focused on the long term. You should take the time to determine a sound investment plan based on your specific goals and risk tolerances and it is best advised to stick to that plan. While it may not always grab headlines, a sensible, tailored investment plan may be the best solution to meeting your long-term goals.