Should breaking news alter investment strategy?
Our days are filled with alerts and notifications that bring the world right to our fingertips. For investors, it’s natural to consider the investment implications of headlines like trade disputes, political uncertainty and global business decisions. If you follow the news, it’s important to consider just how much, or how little, trending stories should influence your financial decisions.
Be aware, but don’t overreact: When reading daily headlines, it’s easy to draw quick conclusions about what may happen in the world based on emotion or your own perception. But for the sake of your financial health, it is important to avoid overreacting to specific news events. When evaluating whether you need to make changes to your portfolio, look for persistent trends that may affect the broader economy’s vitals.
The market has overcome challenges before: It’s also important to remember that historically markets have rebounded after large business decisions, global news and challenging political situations captivate the news cycle. In the past century alone, America has witnessed the Great Depression, assassinations, political scandals, deadly terrorist attacks and financial crises. At times, markets have reacted negatively to specific events that dominate headlines. But historically a sense of normalcy has returned, allowing investors to once again turn their focus to underlying investment fundamentals.
Focus on your goals: Regardless of what is happening in the current news cycle or markets, one investing principle holds true: focus on your financial goals. If you are accumulating wealth to meet a goal that is years away, market volatility that happens today, next week or next year is likely part of the normal pattern you should expect. If specific headlines or trends are making you reconsider your investment strategy, re-evaluate your risk tolerance and consider meeting with a financial professional for a second opinion. Together you can discuss how to best position your portfolio for the current environment in a way that is consistent with your goals.