Ignore The News

As an investor, your reaction to news matters far more than the news itself. In fact, the news doesn’t matter at all - only your reaction does.

Since November, I’ve had countless clients contact me worried about the president, the prime minister, the opposition, the richest human on earth, tariffs, and war. My response has been the same every time: “As an investor, I don’t care. And neither should you.”

(Before anyone tells me my apathy is terrible, look at the words in italics).

One of the most difficult - and most important - parts of my job is keeping clients’ emotions out of investing.

At the end of the day, there are only three things that matter when it comes to investing: being diversified, enduring volatility, and not reacting. That’s it.

Being diversified means always hating something in your investment account. But it ensures that no single event or downturn in one area can derail your entire portfolio. A well-diversified investor is positioned to ride out whatever the future has in store.

Enduring volatility is about recognizing that market ups and downs are normal. Investors often, and foolishly, think they can predict when the market will drop (or rise). History shows they are more likely to miss the recovery than time it correctly. Accept the downturns. They are the price of admission for long-term returns. 

Not reacting is the hardest part. It’s human nature to want to do something when markets move sharply. No action is often the best action. Market history has shown that those who stay invested through uncertainty typically come out ahead of those who jump in and out. And by a wide margin.

Look at past market scares like Brexit, the 2016 U.S. election, the COVID crash, and 2022. Investors who panicked and sold lost out. Those who stayed the course saw their portfolios recover and grow. Remember, the end of the world only happens once.

Investing isn’t about reacting. It’s about sticking to then plan when everyone around you loses their mind.

Forget the news and stick to your plan.  Investors who do will always have an edge over those who worry about headlines.