From notifications popping up on your phone to views and commentary in your social feeds, it’s harder than ever to escape the endless stream of news coming at you.
As little as a decade ago, investors may have learned about changes happening in the markets in the morning paper, catching up on the previous day’s events during the commute or over coffee and toast at the breakfast table.
In fact, many successful investors accrued their wealth at a time when it wasn’t unusual to have an entire month pass without knowing how their investments were faring.
While it may be hard to imagine, the slow news cycle helped to defuse potentially problematic emotions. Today, without the natural buffer of time, you may find that, faced with fast-moving, often alarming information, you’re more likely to make emotion-led decisions.
Breaking news is coming at you, ready or not
Now the news comes at us every minute of the day. Rather than finding time to catch up with what has happened, we’re hard-pressed to avoid what is happening in a single moment.
The financial media compete for our attention – almost every digital outlet measures success according to the number of eyeballs they attract.
And every financial journalist worth their salt knows exactly which buttons to push: anxiety and fear.
As a result, financial media outlets are well-honed in turning minor market fluctuations into crises. Whether markets decline 2% or 10%, if there’s an opportunity to shout that markets are “in turmoil”, it’s an opportunity not to miss, regardless of the facts.
In light of this, it’s useful to remember that research has shown that having more information doesn't necessarily lead to better investment decisions.
Our brains aren’t designed to process the volume of information we now receive on a daily basis. Rather, human beings seek patterns, which can be hard to decipher in markets that fluctuate at random and last only a matter of days, or even hours.
And this is the perfect time to remind you that research has also shown that investors who trade frequently in response to news tend to underperform those who trade less.
4 strategies for investors in the digital age
Here are four strategies to help you remain disciplined when faced with information overload.
1. Create boundaries
Rather than checking your portfolio in response to headlines, make a regular date to check in on your investments at around the same time each month. As a long-term investor, a monthly check-in is more than adequate.
The most successful investors think about the long term and ignore short-term fluctuations. As legendary investor Charlie Munger of Berkshire Hathaway famously said, “The big money is not in the buying and the selling, but in the waiting.”
2. Focus on fundamentals that matter
Headlines are designed to provoke a reaction and focus on the short term. Meanwhile, your financial plan is built on logic, evidence, and the long term.
During periods of market volatility, keep in mind that you own businesses, not stock tickers. So, before you act, ask the question: “Has the long-term outlook for these businesses fundamentally changed, or just their prices?”
3. Remember your long-term goals
To be a successful investor, the wise move is to keep your long-term goals and primary reasons for investing front of mind.
Whether you’re aiming for financial freedom in retirement, or want to ensure you can afford the best for your children’s education, remembering your “why” could help you keep a clear mind and resist the temptation to react to short-term fluctuations.
4. Take control
Ultimately, when it comes to investing, time is your friend. Despite the challenges of modern investing, the foundations remain exactly the same. Patience and discipline are the key watchwords to always keep front of mind.
So, turn your back on the 24/7 news cycle. Even if only for a day.
By limiting your access to the news, you might find that you feel more in control of your investment decisions.
We’re here to support your financial journey and provide ongoing peace of mind
We don’t make investment decisions based on “breaking news”, but on sound market analysis and your long-term financial plan.
If you’re finding it difficult to avoid getting caught up in the endless media noise, we’re here to help you understand the underlying story and provide reassurance.
